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items, maintain records, and cooperate fully with respondent’s
reasonable requests. Petitioner therefore bears the burden of
proof.
I. Schedule C Deductions
A taxpayer who carries on a trade or business generally may
deduct ordinary and necessary expenses paid or incurred in
connection with the operation of the business. Sec. 162(a); see
also FMR Corp. & Subs. v. Commissioner, 110 T.C. 402, 414 (1998).
Personal expenses, in contrast, generally are not deductible.
Sec. 262(a). Respondent does not dispute that each of the three
activities in question qualifies as a trade or business for
Federal income tax purposes. Thus, we address only whether the
expenses petitioner claimed were ordinary and necessary, and
whether they were paid or incurred in connection with a trade or
business.
Before discussing the deductions in issue, we note that
petitioner lost a number of receipts when she accidentally threw
them away. When a taxpayer’s records have been lost or destroyed
through circumstances beyond his control, the taxpayer is
entitled to substantiate a deduction by reconstruction of his
expenditures through other credible evidence. Smith v.
Commissioner, T.C. Memo. 1998-33; see also Malinowski v.
Commissioner, 71 T.C. 1120, 1125 (1979). We do not find that
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