Dennis E. Runkle and Debra A. Runkle - Page 34

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          that those determinations are erroneous.10  Rule 142(a); see                
          INDOPCO Inc. v. Commissioner, 503 U.S. 79, 84 (1992); Welch v.              
          Helvering, 290 U.S. 111, 115 (1933).                                        
               Second, deductions are a matter of legislative grace, and              
          the taxpayer must show that he or she is entitled to any                    
          deduction claimed.  Rule 142(a); Deputy v. duPont, 308 U.S. 488,            
          493 (1940); New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440            
          (1934); Welch v. Helvering, supra.  This includes the burden of             
          substantiation.  Hradesky v. Commissioner, 65 T.C. 87, 90 (1975),           
          affd. per curiam 540 F.2d 821 (5th Cir. 1976).                              
               A taxpayer must substantiate amounts claimed as deductions             
          by maintaining the records necessary to establish he or she is              
          entitled to the deductions.  Sec. 6001; Hradesky v. Commissioner,           
          supra.  A taxpayer shall keep such permanent records or books of            
          account as are sufficient to establish the amount of deductions             
          claimed on the return.  Sec. 6001; sec. 1.6001-1(a), (e), Income            
          Tax Regs.  The Court need not accept taxpayer's self-serving                
          testimony when the taxpayer fails to present corroborative                  


               10This principle would not be affected by sec. 7491(a) even            
          if it applied to this case, which it does not because sec. 7491             
          applies to examinations begun post-July 22, 1998.  Internal                 
          Revenue Service Restructuring and Reform Act of 1998, Pub. L.               
          105-206, sec. 3001(c), 112 Stat. 727.  Sec. 7491 would not shift            
          the burden of proof to respondent because Mr. Runkle failed to              
          comply with the substantiation requirements and failed to                   
          maintain adequate records.  See sec. 7491(a)(2)(A) and (B); see             
          also Higbee v. Commissioner, 116 T.C. 438 (2001).                           






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