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because petitioners did not: (1) Adequately substantiate those
deductions; and/or (2) establish the business purpose for the
deductions.
We begin with a fundamental proposition of Federal income
taxation. Deductions are matters of legislative grace. New
Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934); Segel v.
Commissioner, 89 T.C. 816, 842 (1987). Taxpayers are required to
substantiate the claimed deductions by maintaining records
necessary to establish entitlement and the amount of the
deduction in question. Sec. 6001; Meneguzzo v. Commissioner,
43 T.C. 824, 831-832 (1965); sec. 1.6001-1(a), Income Tax Regs.;
see Rule 142(a); INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84
(1992); Welch v. Helvering, 290 U.S. 111, 115 (1933); Segel v.
Commissioner, supra; Hradesky v. Commissioner, 65 T.C. 87, 90
(1975), affd. per curiam 540 F.2d 821 (5th Cir. 1976). In
general, the burden to demonstrate entitlement to a claimed
deduction rests with the taxpayer. Rule 142(a); Underwood v.
Commissioner, 56 F.2d 67 (4th Cir. 1932), revg. 20 B.T.A. 1117
(1930).
Generally, section 162(a) allows “as a deduction all the
ordinary and necessary expenses paid or incurred during the
taxable year in carrying on any trade or business”, including a
taxpayer’s trade or business as an employee. See Primuth v.
Commissioner, 54 T.C. 374, 377-378 (1970). To support expenses
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