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management services during the years at issue; in addition, when
the airplane was used in the conduct of the management services
activity, Investments received reimbursements for some of the
actual costs associated with the maintenance of the airplane.
Overall, 56 percent and 77 percent of the airplane's total flight
time during taxable years 1988 and 1989, respectively, was
associated with providing management services. In addition, 11
percent of the airplane’s total flight time for taxable year 1988
was for the benefit of Rich Ford Sales. In contrast to this
substantial business-related use, petitioner’s actual use of the
airplane was minor, and he paid for such use. Accordingly, we
reject respondent’s argument that the airplane was maintained
primarily for the benefit of petitioner, and we hold that the
airplane was owned and maintained primarily for the benefit of
Investments' business activities.
Respondent next argues that the airplane expenditures were
not allowable because they were not ordinary and necessary. Each
of the other entities was a substantial distance from
Albuquerque, New Mexico. By maintaining an airplane, Investments
could provide the other entities with management, accounting, and
legal support within a short time period. In addition, the
airplane enabled Investments’ employees to visit more than one of
the other entities in a single day, and it allowed the employees
to visit one of the other entities for part of the day and return
to Investments’ home office for the remainder of the day. Based
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