- 8 - Petitioner seeks a redetermination of deficiencies in this case on the grounds that he was engaged in a trade or business with respect to RBS within the meaning of section 183 during the taxable years in issue, and that he possesses the necessary documentation to substantiate the disallowed business expenses. Petitioner does not raise as issues either the self-employment tax, the unreported income that respondent included in the determination for taxable year 2000, or the recharacterized income as reported on his Schedules C for RBS.2 Discussion Generally, the taxpayer bears the burden of proving the Commissioner’s determinations incorrect. Rule 142(a)(1); Welch v. Helvering, 290 U.S. 111, 115 (1933). Tax deductions are a matter of legislative grace with the 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 7491(a), this burden of proof may shift to the Commissioner in certain situations. Petitioner contends that section 7491(a) requires respondent to bear the burden of proof. We need not decide this issue, however, because our analysis in 2 There is nothing in the record to support respondent’s determination recharacterizing the gross income reported on Schedules C for RBS during the years at issue as reimbursement for expenses from petitioner’s employer, IRS. The Court is at a loss as to why this adjustment was made.Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 NextLast modified: November 10, 2007