National Industrial Investors, Inc. - Page 28

                                               - 28 -                                                  

                  (a) General Rule--No deduction shall be allowed for--                                
                        (1) Premiums paid on any life insurance policy covering                        
                  the life of any officer or employee, or of any person                                
                  financially interested in any trade or business carried on                           
                  by the taxpayer, when the taxpayer is directly or indirectly                         
                  a beneficiary under such policy.                                                     
            Since Byrne was an officer of petitioner, and since petitioner                             
            was a beneficiary of the policy, petitioner may not deduct the                             
            premium it paid on that policy. Merrimac Hat Corp. v.                                      
            Commissioner, 29 B.T.A. 690 (1934); Klinck v. Commissioner, a                              
            Memorandum Opinion of this Court dated Dec. 31, 1952.                                      
                  Respondent argues that petitioner was not entitled to deduct                         
            automobile expenses due to lack of business purpose and                                    
            substantiation.  Section 274(d) imposes stringent substantiation                           
            requirements for travel, entertainment, gifts, and "listed                                 
            property (as defined in section 280F(d)(4))".  Passenger                                   
            automobiles are listed property under section 280F(d)(4)(i).                               
            Section 274(d) denies these deductions unless:                                             
                  the taxpayer substantiates by adequate records or by                                 
                  sufficient evidence corroborating the taxpayer's own                                 
                  statement (A) the amount of such expense or other item, (B)                          
                  the time and place of the travel, entertainment, amusement,                          
                  recreation, or use of the facility or property, or the date                          
                  and description of the gift, (C) the business purpose of the                         
                  expense or other item, and (D) the business relationship to                          
                  the taxpayer of persons entertained, using the facility or                           
                  property, or receiving the gift.  * * *                                              
                  Under section 274(d), deductions for automobile expenses or                          
            travel expenses may not be estimated.  Instead the taxpayer must                           

Page:  Previous  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  29  30  31  32  Next

Last modified: May 25, 2011