- 11 - 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-Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011