- 12 -
petitioner actually operated the franchise aspect of the Tasha’s
Cafe concept by holding numerous presentations to potential
franchisees in which he offered to sell Tasha’s Cafe franchises.
Petitioner therefore was actively engaged in the trade or
business of franchising the Tasha’s Cafe concept, and his
expenditures for 2001 and 2002 are not subject to the limitations
of section 195.
III. Substantiation
On petitioner’s Schedule C for 2001, he claimed $10,693 of
deductible car and truck expenses, $929 of deductible meals and
entertainment expenses, and $43,726 of other deductible expenses.
On petitioner’s Schedule C for 2002, he claimed $1,140 of
deductible car and truck expenses, $6,265 of deductible travel
expenses, $1,131 of deductible meals and entertainment expenses,
and $39,465 of other deductible expenses.
Deductions are a matter of legislative grace, and taxpayers
generally bear the burden of proving that they are entitled to
any deductions claimed. Rule 142(a); INDOPCO, Inc. v.
Commissioner, 503 U.S. 79, 84 (1992); New Colonial Ice Co. v.
Helvering, 292 U.S. 435, 440 (1934). As noted supra, taxpayers
must maintain sufficient records to enable the Commissioner to
determine their correct tax liability. Sec. 6001.
Section 162 generally allows a deduction for ordinary and
necessary expenses paid or incurred during the taxable year in
Page: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: November 10, 2007