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The record consists of only two exhibits that pertain to
these adjustments. One exhibit, a security agreement, reveals
that during 1989, a used 1985 Carver boat was purchased, and
$200,250 of the purchase price was financed. Attached to the
agreement is an amortization schedule showing a breakdown of the
principal and interest to be paid. The other exhibit is a
December 1, 1994, memorandum from petitioner’s accountant’s
office to respondent’s agent. The memorandum contains summarized
information provided by the accountant pursuant to the request of
respondent’s agent. The memorandum contains the following
pertinent statements about the yacht:
7) Business purpose and expenses of Yacht - Per Ed
Helwig, the boat (yacht is a misnomer as the vessel is
42 foot trailer-able boat) is used to entertain
customers. As the boat is not docked in a slip, but is
parked at his house, there are no monthly expenses
related to maintenance.
* * * * * * *
Pursuant to Sec. 274 the boat is not depreciated for
federal income tax purposes. Any expenses related to
the entertainment of customers on the boat are out-of-
pocket costs reimbursed to E.A. Helwig by the
corporation or corporate credit card charges, both of
which are charged to the meals and entertainment
accounts and limited to 80% deductible. A “schedule of
use” is not available.
Based on the above, respondent contends that no deduction is
allowable for any expenditure paid with respect to an
entertainment facility after December 31, 1978, pursuant to
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