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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.
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