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OPINION
A taxpayer is required to keep records to enable a
determination of the taxpayer’s correct Federal income tax
liability to be made. Sec. 6001; sec. 1.6001-1(a), Income Tax
Regs.
A taxpayer may deduct from income ordinary and necessary
expenses paid or incurred during a year in connection with the
production of income. Sec. 212.
Under section 1.446-1(c)(1)(i), Income Tax Regs., a taxpayer
who uses the cash method of accounting to compute taxable income
may only deduct expenses in the year the expenses are paid. See
Estate of Gordon v. Commissioner, 47 T.C. 462, 466 (1967);
Dehoney v. Commissioner, T.C. Memo. 2006-108; Sandoval v.
Commissioner, T.C. Memo. 1979-430.
Petitioner’s argument that the statutory language of section
212 allows her a deduction for legal expenses “incurred” but not
paid in 2001 is without merit.
Because petitioner has not substantiated that she paid any
legal fees in 2001, petitioner is not entitled to a deduction in
2001 for legal fees in any amount.
To reflect the foregoing,
Decision will be entered
under Rule 155.
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Last modified: November 10, 2007