                          T.C. Memo. 1996-497



                        UNITED STATES TAX COURT


                     JOHN BRESNAHAN, Petitioner v.
             COMMISSIONER OF INTERNAL REVENUE, Respondent



        Docket No. 10070-95.                   Filed November 5, 1996.


        Frederick R.H. Witherby, Jr. (specially recognized), for

petitioner.

        Mae J. Lew, for respondent.



                          MEMORANDUM OPINION

        DEAN, Special Trial Judge:    This case was assigned pursuant

to the provisions of section 7443A(b)(3) and Rules 180, 181, and

182.1


        1
      Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year at issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure. Dollar amounts are rounded to the nearest dollar.
                                -2-

     Respondent determined a deficiency in petitioner's 1991

Federal income tax in the amount of $4,012.

     The sole issue for decision is whether petitioner reported

the correct amount of income from a grantor trust.

     Some of the facts have been stipulated and are so found.

The stipulation of facts and the exhibits received into evidence

are incorporated herein by reference.   Petitioner resided in

Shrewsbury, Massachusetts, at the time he filed his petition.

Background

     Petitioner created a grantor trust which derived income from

leasing safe deposit boxes to the Midwest Federal Savings Bank.

The trust issued to petitioner a "1041 Supplement" indicating net

income attributable to petitioner in 1991 of $87,519.   On his

1991 Federal income tax return, however, petitioner only reported

$74,955 of net income from the trust.

     Respondent determined that petitioner's share of income from

the trust is $87,519 and, accordingly, that petitioner had

unreported income in the amount of $12,564 ($87,519 trust income

less $74,955 trust income reported).

Discussion

     Petitioner concedes that he had unreported income in the

amount of $5,831 and, accordingly, that his share of trust income

should be $80,786.   However, petitioner contends that the "1041

Supplement" he received from the trust is incorrect.    Petitioner

contends that his share of trust income should include an
                                -3-

increased deduction for depreciation in the amount of $11,382 and

increased income from gain on disposition of an asset of $4,649.2

Therefore, petitioner asserts, the $87,519 reported as

petitioner's share of income from the trust on the "1041

Supplement" should be reduced by $6,733 ($11,382 increase in

depreciation deduction less $4,649 increase in income from gain

on disposition of asset) to $80,786.

     Respondent's determinations are presumed correct, and

petitioner bears the burden of proving otherwise.   Rule 142(a);

Welch v. Helvering, 290 U.S. 111, 115 (1933).   Moreover,

deductions are a matter of legislative grace, and petitioner

bears the burden of proving that he is entitled to any deduction

claimed.   Rule 142(a); New Colonial Ice Co. v. Helvering, 292

U.S. 435, 440 (1934); Welch v. Helvering, supra at 115.

     The parties agree that the trust involved here is a so-

called grantor trust subject to the provisions of subpart E, part

I, of subchapter J.   When the grantor (in this case, petitioner)

is treated as the owner of any portion of a trust, the grantor's

taxable income and credits include those items of the trust's

income, deductions, and credits attributable to the portion of

the trust that the grantor is treated as owning.    Sec. 671.   An

item of income, deduction, or credit included in computing a


     2
      Petitioner does not explain the increase in income from the
gain on disposition of the asset but, apparently, it is related
to the change in the depreciation deduction.
                                 -4-

grantor's taxable income and credits is treated as if the grantor

had received or paid it directly.      Sec. 1.671-2(c), Income Tax

Regs.   The effect of these provisions is that the trust is

disregarded as a separate entity in computing the taxable income

from the grantor's portion of the trust, and the grantor is taxed

on the income as if he received it directly.      Scheft v.

Commissioner, 59 T.C. 428, 431-432 (1972).      Accordingly,

petitioner must establish that he is entitled to the depreciation

deduction claimed as if he owned the safe deposit boxes directly,

and not through the trust.

     Petitioner has the burden of proving that he is entitled to

the depreciation deduction claimed.      Bell Electric Co. v.

Commissioner, 45 T.C. 158, 167 (1965); Williams v. Commissioner,

T.C. Memo. 1991-567.   Petitioner presented no evidence as to the

basis or recovery period of the safe deposit boxes.      Accordingly,

petitioner has failed to carry his burden of proving that he is

entitled to a deduction for depreciation.      We therefore sustain

respondent's determination that petitioner had unreported income

in the amount of $12,564.

     To reflect the foregoing,

                                            Decision will be entered

                                       for respondent.
