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tax of $13,150, and determined a deficiency in petitioner’s 2001
Federal income tax of $58,956.
In response to the notice of deficiency, petitioner filed
his petition with this Court on January 9, 2006.
OPINION
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.4 See INDOPCO,
Inc. v. Commissioner, 503 U.S. 79, 84 (1992); New Colonial Ice
Co. v. Helvering, 292 U.S. 435, 440 (1934). A taxpayer may
deduct all ordinary and necessary expenses paid or incurred
during the taxable year in carrying on any trade or business if
the taxpayer maintains sufficient records to substantiate the
expenses. Secs. 162(a), 6001; Deputy v. du Pont, 308 U.S. 488,
495-496 (1940); sec. 1.6001-1(a), Income Tax Regs. If a claimed
business expense is deductible, but the taxpayer is unable to
substantiate it, we are generally permitted to approximate the
amount of the expense if we have a reasonable evidentiary basis
4 Under sec. 7491(a)(1), if the taxpayer introduces
credible evidence with respect to any factual issue, the burden
of proof shall shift to the Commissioner. On this issue, the
burden of proof does not shift to respondent because petitioner
did not maintain adequate books and records and was unable to
substantiate $276,362 of the claimed Schedule C expenses. See
sec. 7491(a)(2).
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