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A. Automobile Expenses
Respondent determined that petitioner may deduct $530 in
automobile expenses for 1979 and $0 for 1980. Petitioner asserts
that he used his Jaguar XJ-12-L (the car) solely for business
purposes; therefore his deductions for the taxable years in issue
are fully allowable.
Section 162 generally allows a taxpayer to deduct all
ordinary and necessary expenses incurred during the taxable year
in carrying on a trade or business. Sec. 162(a). An expense is
ordinary if it is considered to be "normal, usual, or customary"
in the context of the particular business out of which it arose.
Deputy v. Du Pont, 308 U.S. 488, 495-496 (1940). An expense is
necessary if it is appropriate and helpful to the operation of
the taxpayer's trade or business. Commissioner v. Tellier, 383
U.S. 687, 689 (1966). A taxpayer's general statement that his
expenses were incurred in pursuit of a trade or business normally
is not sufficient to establish that the expenses had a reasonably
direct relationship to that trade or business. Ferrer v.
Commissioner, 50 T.C. 177, 185 (1968), affd. per curiam 409 F.2d
1359 (2d Cir. 1969). Rather, a taxpayer ordinarily must maintain
records sufficient to permit verification of income and expenses.
6(...continued)
Auto $530 -0-
T&E 1,136 $1,950
Sailboat -0- -0-
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Last modified: May 25, 2011