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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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