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been reported as a loss from business. Instead, respondent
allowed a deduction of $83,451 for the claimed loss from gambling
as a Schedule A itemized deduction.
Reclassification of Mr. Mohammadpour’s gambling activity
resulted in the disallowance of petitioners’ claimed child tax
credit and in a reduction in the amount of otherwise allowable
itemized deductions.
Discussion
As a general rule, the Commissioner’s determinations in the
notice of deficiency are presumed correct, and the burden of
proving an error is on the taxpayer. Rule 142(a); Welch v.
Helvering, 290 U.S. 111, 115 (1933). Petitioners have neither
claimed nor shown that they satisfied the requirements of section
7491(a) to shift the burden of proof to respondent. Hence,
petitioners bear the burden of proving that respondent’s
deficiency determinations are incorrect.
In general, all ordinary and necessary expenses paid or
incurred in carrying on a trade or business during the taxable
year are deductible. Sec. 162(a). A taxpayer may have more than
one trade or business. Curphey v. Commissioner, 73 T.C. 766
(1980); Calvao v. Commissioner, T.C. Memo. 2007-57; Barrish v.
Commissioner, T.C. Memo. 1984-602.
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Last modified: November 10, 2007