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According to petitioner, 1 or 2 days prior to the date of the
picnic, he was advised that Avalon would not perform according to
the agreement.6 Petitioner then entered into a new contract with
A & S Catering (A & S). Petitioner was informed by the principal
of the school that she would not authorize the disbursement of
funds to A & S. Petitioner then paid $2,500 to A & S out of his
own funds, and deducted the amount as an unreimbursed employee
business expense on Schedule A of his income tax return.
With respect to the $2,500 paid by petitioner to A & S, we
note that section 162(a) allows a deduction for all ordinary and
necessary expenses incurred in carrying on a trade or business.
Generally, the performance of services as an employee constitutes
a trade or business. Primuth v. Commissioner, 54 T.C. 374, 377
(1970). In this regard, petitioner maintains that he may deduct
the $2,500 as an ordinary and necessary expense. The record,
however, indicates that petitioner was aware that the school's
principal disapproved of the expenditure before petitioner
incurred the expense in question. We are not persuaded that this
expense, incurred with the knowledge that it would not be
approved by his superiors, was ordinary and necessary to
6 Documents in this record are inconsistent with
petitioner's testimony. Said documents could lead us to the
conclusion that petitioner unilaterally terminated the contract
with Avalon. We need not, and do not, decide for purposes of
this opinion whether petitioner was at fault or exactly what role
petitioner played in the failure of Avalon to perform the
catering services.
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