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exactly which company or companies owned rights to the “g”
trademark.
On its Federal income tax returns for the years in issue,
petitioner claimed business expense deductions for the total
$2,293,626 in funds transferred to Cremin and for the total
$3,047,635 in funds transferred to Rubbik.
On audit, respondent disallowed petitioner’s claimed
deductions for the funds transferred to Cremin and Rubbik on
grounds that the deductions did not constitute ordinary and
necessary business expenses under section 162(a).
OPINION
A taxpayer may deduct all ordinary and necessary expenses
incurred in carrying on a trade or business. Sec. 162(a).
Ordinary expenses are described as those expenses that are
normal, common, and accepted within a taxpayer’s trade or
business, and necessary expenses are described as those that are
helpful and appropriate to a taxpayer’s trade or business. Tulia
Feedlot, Inc. v. United States, 513 F.2d 800, 804 (5th Cir.
1975); Boser v. Commissioner, 77 T.C. 1124, 1132 (1981).
Transactions between a taxpayer and related parties are subject
to special scrutiny. Tulia Feedlot, Inc. v. United States, supra
at 805. Generally, a taxpayer has the burden of proof and must
prove the deductibility of claimed deductions. Rule 142(a).
Petitioner argues that the funds transferred to Cremin and
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