Lampanh and Sykhane Pchan - Page 5

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          to substantiate his claimed deductions, in excess of those                  
          allowed by respondent, and that petitioner was liable for section           
          6662(a) accuracy-related penalties due to substantial                       
          understatements of income tax.                                              
                                     Discussion                                       
               The Commissioner’s determinations are presumed correct, and            
          generally taxpayers bear the burden of proving otherwise.1  Rule            
          142(a)(1); Welch v. Helvering, 290 U.S. 111, 115 (1933).                    
               Tax deductions are a matter of legislative grace with a                
          taxpayer bearing the burden of proving entitlement to the                   
          deductions claimed.  Rule 142(a)(1); INDOPCO, Inc. v.                       
          Commissioner, 503 U.S. 79, 84 (1992).                                       
               Section 162 allows a deduction for “all ordinary and                   
          necessary expenses paid or incurred during the taxable year in              
          carrying on any trade or business”.  Taxpayers bear the burden of           
          substantiating the amount and purpose of any claimed deduction.             
          See Hradesky v. Commissioner, 65 T.C. 87, 89-90 (1975), affd. per           
          curiam 540 F.2d 821 (5th Cir. 1976).  A taxpayer is required to             
          maintain sufficient records to establish that he is entitled to             
          the claimed deductions.  Sec. 6001; Higbee v. Commissioner, 116             



               1Petitioner has not raised the issue of sec. 7491(a), which            
          shifts the burden of proof to the Commissioner in certain                   
          situations.  This Court concludes that sec. 7491 does not apply             
          because petitioner has not produced any evidence that establishes           
          the preconditions for its application.                                      




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