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Petitioner did not take his sisters to school on a daily
basis, help them with their homework or take them to the doctor.
Ms. Taylor was the primary caregiver for the girls.
During 2002, Ms. Taylor received public assistance payments
for the girls of approximately $750 per month from the State of
California. Ms. Taylor provided respondent with a written
statement that petitioner regularly contributed money to the
household and that he was the only adult in the household who was
employed.
Respondent issued a notice of deficiency determining that
petitioner is not entitled to claim dependency exemption
deductions for his sisters, or any of the credits applicable to
the children for 2002 because he failed to substantiate his
claims.
Discussion
Deductions are a matter of legislative grace, and taxpayers
must maintain adequate records to substantiate the amounts of any
deductions or credits claimed. Sec. 6001; INDOPCO, Inc. v.
Commissioner, 503 U.S. 79, 84 (1992); sec. 1.6001-1(a), Income
Tax Regs. Taxpayers generally bear the burden of proving that
the Commissioner’s determinations are incorrect. Rule 142(a);
Welch v. Helvering, 290 U.S. 111 (1933). Section 7491 does not
apply because petitioner has failed to substantiate his
deductions.
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