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to Investments; accordingly, we find the expenditures arising
from the ownership and maintenance of the plane were necessary.
Finally, respondent argues that the airplane expenditures
were unreasonable in amount compared to the objectives to be
accomplished. Investments’ total costs of owning, operating, and
maintaining its airplane, exclusive of pilot salary, during 1988
and 1989 were $218,452.14 and $142,427.85, respectively.
However, as noted above, we have found that the airplane was both
an ordinary and necessary expense of the operation of
Investments’ Rich Ford Sales division and the operation of its
management services activity. The latter activity alone
generated management fees of $814,452 and $970,997 for taxable
years 1988 and 1989, respectively. In addition, Investments
received reimbursements for airplane expenditures of $48,048.50
and $37,674, exclusive of meals, lodging, etc., for 1988 and
1989, respectively. Although the airplane expenditures were
large for the taxable years at issue, use of the airplane was an
ordinary and necessary part of Investments' businesses and
generated substantial income during the years at issue.
Accordingly, we find that the expenditures associated with owning
and maintaining the airplane for the years at issue were
reasonable.
To reflect the foregoing,
Decision will be entered
under Rule 155.
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