- 34 -
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).
Page: Previous 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 NextLast modified: May 25, 2011