E.W. Richardson - Page 44

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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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