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search is not known, and petitioner was not charged with a
criminal offense as a result of the search.
Petitioner’s timely 2001 Federal income tax return includes
a Schedule A, Itemized Deductions, and a Schedule C, Profit or
Loss From Business. As relevant here, petitioner reported Gifts
to Charity totaling $4,405 on the Schedule A. That amount
consists of $4,000 in cash gifts and $405 in property
contributions. Because of the limitations on deductions allowed
by section 170, petitioner claimed a $2,310 deduction for these
gifts.
No gross receipts are reported on the Schedule C included
with petitioner’s return. The schedule shows cost of goods of
$45,800 and various deductions totaling $17,084. Taking into
account the absence of any gross receipts, the cost of goods sold
and those deductions, a $62,884 business loss is reported on the
Schedule C.
In the notice of deficiency, respondent disallowed, for lack
of substantiation, the business loss deduction and charitable
contribution deduction claimed on petitioner’s 2001 return.
Other adjustments made in the notice of deficiency have been
agreed to or are computational and need not be addressed.
Discussion
As has often been stated, deductions are a matter of
legislative grace, and a taxpayer who claims a deduction must
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