Curtis G. Lockett and Edna L. Lockett - Page 3




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          submitted on the basis of a sparse record consisting of                     
          petitioner husband’s testimony and limited documentary evidence.            
                                     Discussion                                       
          A.   In General                                                             
               Generally, the Commissioner’s determinations in a notice of            
          deficiency are presumed correct, and the taxpayer has the burden            
          to prove that the determinations are in error.  Rule 142(a);                
          Welch v. Helvering, 290 U.S. 111, 115 (1933).2  Deductions are a            
          matter of legislative grace, and a taxpayer must prove                      
          entitlement to claimed deductions.  Rule 142(a)(1); INDOPCO, Inc.           
          v. Commissioner, 503 U.S. 79, 84 (1992); New Colonial Ice Co. v.            
          Helvering, 292 U.S. 435, 440 (1934).  The taxpayer must keep                
          sufficient records to substantiate any deductions claimed.  Sec.            
          6001.  In the event that a taxpayer establishes a deductible                
          expense but is unable to substantiate the precise amount, the               
          Court may approximate the deductible amount, but only if the                
          taxpayer presents sufficient evidence to establish a rational               
          basis for making the estimate.  Cohan v. Commissioner, 39 F.2d              
          540, 543-544 (2d Cir. 1930).                                                
          B.   Casualty and Theft Losses                                              
               Petitioners challenge respondent’s disallowance of various             
          deductions they have claimed for casualty and theft losses.                 


               2 Petitioners have not alleged and the record does not                 
          support a conclusion that the burden of proof is shifted to                 
          respondent pursuant to sec. 7491(a).                                        





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