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these funds occurred. As such, we hold petitioner is not
entitled to any theft loss deductions from the value of his life
insurance policies or his KEYSOP account.
IV. GTG Business Expense Deductions
Petitioner is the sole shareholder of GTG, an S corporation
that trades in raw materials. Petitioner claimed several
business deductions for expenses related to the payment of rent
in 1999 as well as worldwide travel, meals, and entertainment in
both 1999 and 2000.
Section 162(a) authorizes a taxpayer to deduct ordinary and
necessary business expenses paid or incurred during the taxable
year in carrying on a trade or business. Section 1.162-1(a),
Income Tax Regs., provides that “Business expenses deductible
from gross income include the ordinary and necessary expenditures
directly connected with or pertaining to the taxpayer's trade or
business”. Deductions are a matter of legislative grace, and
petitioner must prove his entitlement to the deductions claimed.
INDOPCO, Inc. v. Commissioner, 503 U.S. at 84; see also Cohan v.
Commissioner, 39 F.2d 540, 543-544 (2d Cir. 1930) (where a
taxpayer claims a business expense but cannot fully substantiate
it, the Court may approximate the allowable amount).
In addition, for any expenses related to travel or
entertainment, section 274(d) provides:
SEC. 274(d). Substantiation Required.--No
deduction or credit shall be allowed–-
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