Maria E. Magallon - Page 10

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          $17,871 that represent unreported gross receipts from her flea              
          market sales.                                                               
          II. Taxes and Licenses Expenses Deductions                                  
               Tax deductions are a matter of legislative grace with a                
          taxpayer bearing the burden of proving entitlement to the                   
          deductions claimed.  Rule 142(a)(1); INDOPCO, Inc. v.                       
          Commissioner, 503 U.S. 79, 84 (1992).                                       
               Under section 162, a taxpayer may deduct all ordinary and              
          necessary expenses paid or incurred during the taxable year in              
          carrying on a trade or business, if the taxpayer maintains                  
          sufficient records to substantiate the expenses.  Sec. 162(a);              
          see sec. 6001; Deputy v. du Pont, 308 U.S. 488, 495 (1940).                 
          Taxpayers bear the burden of substantiating the amount and                  
          purpose of any claimed deduction.  See Hradesky v. Commissioner,            
          65 T.C. 87 (1975), affd. per curiam 540 F.2d 821 (5th Cir. 1976).           
               Petitioner claimed Schedule C deductions of $1,460 for taxes           
          and licenses expenses.  Petitioner failed to provide any                    
          documentation to substantiate that she paid $1,460 for taxes and            
          licenses in 2002.  Therefore, respondent’s determination                    
          disallowing the claimed deductions is sustained.                            
          III. Dependency Exemption                                                   
               Petitioner claimed a dependency exemption deduction for her            
          daughter, MA, for 2002.  Section 151(c)(1) allows a taxpayer to             
          claim as a deduction an exemption for each qualifying dependent.            

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