- 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 was
Page: 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