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the taxable year was more for business use than for personal use,
and the taxpayer is required to maintain records segregating the
use of the facility into business and personal categories. Sec.
1.274-5T(c)(6)(iii), Temporary Income Tax Regs., 50 Fed. Reg.
46022 (Nov. 6, 1985). The requirements of section 274 are in
addition to those of section 162, and petitioner must satisfy, as
an initial matter, the "ordinary and necessary" business expense
requirement of section 162. Randall v. Commissioner, 56 T.C.
869, 874-875 (1971).
Petitioner offered into evidence the receipts from the
country club for the year 1987, which he determined were for
business expenditures at the time he prepared his return. There
was no evidence, however, that petitioner ever had any direct
business meetings at the country club. There was only evidence
of his prospecting activities, which did not rise to the level of
a direct business meeting as required. Petitioner has failed to
show that the activities at the country club, which afforded
contacts with possible future clients, had any direct
relationship to the production of business income. See Henry v.
Commissioner, supra.
Petitioner contends that the receipts from the country club
for 1987 illustrate that during more than 50 percent of the days
that he used the country club, the use was for business purposes.
He claims that for this reason he is entitled to a deduction
under the "deemed to have established" rule of section 1.274-
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