- 14 -
employee benefits and are fully deductible under section 162(a).4
Section 162(a) allows a deduction for ordinary and necessary
expenses paid or incurred during the taxable year in carrying on
a trade or business. Sanford v. Commissioner, 50 T.C. 823, 826
(1968), affd. per curiam 412 F.2d 201 (2d Cir. 1969). Losses
from the sale of capital assets by corporate taxpayers are
deductible only to the extent of capital gains. Secs. 165(f),
1211(a). Deductions are a matter of legislative grace, and
taxpayers bear the burden of proving that they are entitled to
the deductions claimed. Rule 142(a); INDOPCO, Inc. v.
Commissioner, 503 U.S. 79, 84 (1992).
Respondent contends that petitioner acquired ownership of
the residences of its relocating employees in both regular and
assigned sales and that in petitioner's possession the residences
are capital assets. Accordingly, respondent argues that
petitioner cannot deduct the payments to the RSC against ordinary
income under section 162. Although petitioner never took title
to its employees' residences, respondent determined that in
substance petitioner, by its control over the property, was the
owner. Respondent's position thus follows the ruling position
that relocating employees' homes purchased by their employer to
assist the employees in the sale of the residences are capital
4 All section references are to the Internal Revenue Code in
effect for taxable years in issue, and all Rule references are to
the Tax Court Rules of Practice and Procedure, unless otherwise
indicated.
Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 NextLast modified: May 25, 2011