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tax under section 6651(a)(1) for petitioners’ failure to file a
timely return. Other adjustments made in the notice of
deficiency are not in dispute.
Discussion
As has often been stated, deductions are a matter of
legislative grace, and the taxpayer bears the burden of proof to
establish entitlement to any claimed deduction.3 Rule 142(a);
INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992); New
Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934). This
burden requires the taxpayer to substantiate deductions claimed
by keeping and producing adequate records that enable the
Commissioner to determine the taxpayer’s correct tax liability.
Sec. 6001; Hradesky v. Commissioner, 65 T.C. 87, 90 (1975), affd.
per curiam 540 F.2d 821 (5th Cir. 1976); Meneguzzo v.
Commissioner, 43 T.C. 824, 831-832 (1965).
Although without expressly making reference to it, in
support of the deductions here in dispute petitioners rely upon
section 162(a). That section generally allows a taxpayer to
deduct ordinary and necessary expenses paid or incurred in
carrying on a trade or business.
3 Petitioner does not claim that the provisions of sec.
7491(a) are applicable, and we proceed as though they are not.
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