- 16 - In general, for purposes of section 162(a) and section 212, an expense is ordinary if it is considered normal, usual, or customary in the context of the particular business or income- producing activity out of which it arose. See, e.g., Deputy v. du Pont, 308 U.S. 488, 495-496 (1940); Estate of Davis v. Commis- sioner, 79 T.C. 503, 507 (1982). Ordinarily, for purposes of those sections, an expense is necessary if it is appropriate and helpful to the operation of the taxpayer's trade or business or income-producing activity. See, e.g., Commissioner v. Tellier, 383 U.S. 687, 689 (1966); Estate of Davis v. Commissioner, supra. Petitioner testified generally that the meal expenses at issue are expenses that were incurred in connection with his rental real estate activities because he used the time that he spent at various restaurants to establish a business relationship with the restaurant's waiters, waitresses, and patrons, who assisted him in the promotion of his rental real estate by refer- ring prospective tenants to him. The meal expenses incurred by petitioner during 1989 reflected the cost of meals for petitioner and Ms. Perry. During that year, petitioner did not at any time buy meals for prospective tenants and did not typically buy meals for then current tenants. The record does not establish the identity of any tenants or other individuals associated with his rental real estate activities for whom petitioner bought meals during 1989, the amounts expended on any such meals, the dates or times that he bought any such meals, or the business that wasPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
Last modified: May 25, 2011