- 41 -
deductions. Hutchinson v. Commissioner, T.C. Memo. 1980-551.
Furthermore, if taxpayers do not substantiate their claimed
deductions, the Commissioner is not arbitrary or unreasonable in
denying them. Roberts v. Commissioner, 62 T.C. 834, 837 (1974);
Taylor v. Commissioner, T.C. Memo. 2006-67.
Petitioners offered no evidence regarding any expenditures
they made that would be eligible for a trade or business expense
deduction on their Schedule C. Petitioners argue on brief that
these expenses were incurred for the collection of income, but
they offered no evidence to substantiate that the income was from
a trade or business they conducted. Therefore, petitioners’
legal expenses are properly deductible only on their Schedule A.
V. Whether Petitioners Had $15,000 of Unreported Income in 1999
In the notice of deficiency, respondent determined that
petitioners failed to report a $15,000 capital gain. In general,
the Commissioner’s determinations are presumed correct, and the
taxpayers bear the burden of proving that they are wrong. Rule
142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). The Court
generally will not look behind a notice of deficiency to examine
the evidence used or the propriety of the Commissioner’s motives
or procedures in making his determination. Greenberg’s Express,
Inc. v. Commissioner, 62 T.C. 324, 327 (1974). To overcome this
presumption of correctness, taxpayers may produce evidence that
the statutory notice is arbitrary or without foundation.
Page: Previous 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 Next
Last modified: March 27, 2008