- 49 -
that the joint venture was engaged in the trade or business
of developing the Moonlight Beach property, and we find
that petitioner continued that business in his individual
capacity during 1986. We also find that petitioner engaged
in that business in order to realize a profit from the
joint venture's sale of the villas and related land to the
club.
Annual Dues Issue
Petitioner claims to have paid annual dues of $10,500
to the beach club in 1986 with respect to the eight club
memberships that he owned during the year. Petitioners
assert that this expenditure, to the extent substantiated,
was made to maintain the club memberships. Accordingly,
petitioners argue that they are each entitled to deduct
one-half of the amount paid under section 162(a) as an
ordinary and necessary business expense. They do not claim
to be entitled to deduct that amount under section 212.
Respondent disallowed the deductions in the notices of
deficiency on the ground that "there is no business purpose
for this transaction". In respondent's post-trial briefs,
respondent concedes that the expenditure, to the extent
substantiated, would be deductible as a business expense if
the Court finds that the club memberships were held by
Page: Previous 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 NextLast modified: May 25, 2011