- 39 -
deductions claimed. Rule 142(a); INDOPCO, Inc. v. Commissioner,
503 U.S. 79, 84 (1992).
Section 162(a) allows a taxpayer to deduct ordinary and
necessary expenses paid or incurred in carrying on a trade or
business. If a corporation owns and maintains property primarily
for the benefit of a shareholder, the deductions arising from
such property will not be allowable, as such deductions are not
incurred in carrying on a trade or business. International
Trading Co. v. Commissioner, 275 F.2d 578, 584, 585 (7th Cir.
1960), affg. T.C. Memo. 1958-104; Cirelli v. Commissioner, 82
T.C. 335, 350 (1984); International Artists, Ltd. v.
Commissioner, 55 T.C. 94, 104 (1970); Challenge Manufacturing Co.
v. Commissioner, 37 T.C. 650, 659-661 (1962); see A.E. Staley
Manufacturing Co. v. Commissioner, 105 T.C. 166, 191 (1995). In
contrast,
where the acquisition and maintenance of property such as an
automobile or residence is primarily associated with profit-
motivated purposes, and personal use can be said to be
distinctly secondary and incidental, a deduction for
maintenance expenses and depreciation will be permitted.
[International Artists, Ltd. v. Commissioner, supra at 104.]
Furthermore, if substantial business and personal motives exist,
allocation of the expenditures becomes necessary. Id. at 105;
see also International Trading Co. v. Commissioner, supra at 587;
Gibson Prods. Co. v. Commissioner, 8 T.C. 654, 660 (1947).
In addition to the requirement that deductions be incurred
in the conduct of a trade or business, section 162(a) provides
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