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Accordingly, respondent’s determination disallowing
deductions for charitable contributions, to the extent not
conceded, is sustained.
2. Employee Business Expenses
Petitioner reported employee business expenses of $3,995 for
2002. Of this amount, respondent concedes that petitioner has
substantiated expenses of $555.63. At issue is whether
petitioner is entitled to deductions for the remaining claimed
employee business expenses.
Section 162(a) allows a deduction for ordinary and necessary
expenses paid or incurred during the taxable year in carrying on
a trade or business. Services performed by an employee
constitute a trade or business. O’Malley v. Commissioner, 91
T.C. 352, 363-364 (1988); sec. 1.162-17(a), Income Tax Regs. The
employee must show the relationship between the expenditures and
the employment. See Joseph v. Commissioner, T.C. Memo. 2005-169.
Section 6001 and the regulations promulgated thereunder require
taxpayers to maintain records sufficient to permit verification
of income and expenses. Higbee v. Commissioner, 116 T.C. 438,
440 (2001); sec. 1.6001-1(a), Income Tax Regs.
Petitioner claimed “physical fitness dues” of $720 on
Schedule A as an employee business expense. In support,
petitioner presented a gym membership agreement showing that he
paid a gym membership fee of $708 in 2002. Respondent argues
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