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presumption that respondent’s deficiency determination with
respect to her income from that source was correct.16
G. Deductions
Section 162 generally allows a taxpayer to deduct “all the
ordinary and necessary expenses paid or incurred during the
taxable year in carrying on a trade or business”. An “ordinary”
expense is one that is normal, usual, or customary in the type of
business involved. See Deputy v. Du Pont, 308 U.S. 488, 495
(1940). A “necessary” expense is one that is “appropriate and
helpful” to the taxpayer’s business. Welch v. Helvering, 290
U.S. 111, 113 (1933).
Deductions are a matter of legislative grace. New Colonial
Ice Co. v. Helvering, 292 U.S. 435, 440 (1934). Taxpayers have
the burden to show they are entitled to any deduction claimed on
their returns, and they must be able to point to some particular
statute and demonstrate that they come within its terms. Deputy
v. Du Pont, supra at 493; New Colonial Ice Co. v. Helvering,
supra. Where taxpayers do not substantiate their claimed
deductions, the Commissioner is not arbitrary or unreasonable in
determining that the claimed deductions should be denied.
Roberts v. Commissioner, 62 T.C. 834, 837, (1974).
16 On petitioner’s 1999 Form 1040, Schedule C, she reported
income from the business, “Natures Herbs”, admitting her
relationship with this business during that year.
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