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Business School
Petitioners claimed $28,417 of expenses related to the
business school on their 1991 Schedule C. Respondent disallowed
all of the claimed deductions.
We found as a fact that petitioners paid at least $20,033 of
expenses associated with the AESI contract, including $9,240 to
AESI and $10,793 for gasoline, travel, lodging, meals, and
entertainment. Petitioners have failed to substantiate any
additional expenses. We must thus determine whether the
substantiated expenses are ordinary and necessary and, therefore,
deductible.
Section 162(a) allows a deduction for "all the ordinary and
necessary expenses paid or incurred during the taxable year in
carrying on any trade or business". "Ordinary" has been defined
as that which is "normal, usual, or customary" in the taxpayer's
particular trade or business. Deputy v. du Pont, 308 U.S. 488,
495 (1940). The expense need not be one common for the
particular taxpayer, but instead one that is not rare in the
taxpayer's business. See Welch v. Helvering, 290 U.S. 111, 114
(1933). The substantiated expenses included "normal" expenses
for the conduct of a business school abroad, including travel to
and from Russia for petitioner and the faculty; the expenses for
AESI's building the curriculum and locating the faculty; the
food, meals, and lodging for the faculty in Russia; and the
travel, food, meals, and lodging for the top students from Russia
who came to the United States after the school.
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