- 4 - 84 (1992); New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934). The taxpayer is required to maintain records sufficient to enable the Commissioner to determine his correct tax liability. Sec. 6001; Higbee v. Commissioner, 116 T.C. 438, 440 (2001); sec. 1.6001-1(a), Income Tax Regs. Such records must substantiate both the amount and purpose of the claimed deductions. Higbee v. Commissioner, supra. I. Schedule C Deductions Petitioner claimed a $15,652 Schedule C business loss for 2004 that resulted from his deducting $20,548 in business expenses and reporting $4,896 in income. The notice of deficiency disallowed $7,853, the entire amount claimed for business use of the home, and $3,949 in other expenses claimed for computers, monitors, and a fax machine. A. Business Use of Home Section 162(a) allows a taxpayer to deduct all ordinary and necessary expenses paid or incurred in carrying on a trade or business. The taxpayer is generally precluded from deducting expenses incurred in connection with the business use of the residence. See sec. 280A. As an exception to the general rule, section 280A(c)(1) permits the deduction of expenses allocable to a portion of the dwelling unit which was used exclusively and regularly (1) as a principal place of business, (2) as the place for meeting with customers, clients, or patients in the normalPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 NextLast modified: November 10, 2007