-11-
2003. It was deemed admitted under Rule 37(c) that petitioner
received income in the amount of $95,382, incurring an income tax
liability of $23,585 for 2003.13 We therefore hold that
petitioner received unreported income in the above amount.
B. Disallowed Deductions
In addition to the receipt of unreported income, respondent
determined that petitioner overstated deductions. Section 161
provides for itemized deductions in computing taxable income.
However, deductions are a matter of legislative grace, and a
taxpayer bears the burden of proving that he has complied with
the specific requirements for any deduction he claims. See
INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992); New
Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934). The
taxpayer has the burden of substantiating any deduction.
Hradesky v. Commissioner, 65 T.C. 87, 89-90 (1975), affd. per
curiam 540 F.2d 821 (5th Cir. 1976); see also Rule 142(a).
Respondent denied or reduced petitioner’s claimed deductions
for the years 2000, 2001 and 2002, including a Schedule E expense
for 2001. Petitioner presented no evidence to substantiate any
of these deductions. Furthermore, at trial petitioner refused to
answer questions about his deductions for the years at issue,
asserting meritless arguments. Therefore, petitioner has failed
to meet his burden with respect to the disallowed deductions.
13Respondent allowed petitioner certain itemized deductions
totaling $13,142.
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