Donald Victor Teschner - Page 10

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               Travel and meals and entertainment expenses are deductible             
          if they are ordinary and necessary to a taxpayer’s business.                
          Sec. 162(a).  Section 274(d), however, provides that no deduction           
          will be allowed for travel expenses or any activity which is                
          generally considered to constitute entertainment unless the                 
          taxpayer maintained records sufficient to establish:  (1) The               
          amount of each expense; (2) the time and place of the activity;             
          (3) the business purpose of the activity; and (4) the business              
          relationship to the taxpayer of persons entertained.  Sec.                  
          274(d).  Meals in a restaurant are generally considered to be               
          “entertainment” and governed by section 274(d).  See, e.g.,                 
          Matlock v. Commissioner, T.C. Memo. 1992-324.  Section 274(d) is            
          an exception to the Cohan rule and prohibits the estimation of              
          these expenses.  Sanford v. Commissioner, 50 T.C. 823, 827-828              
          (1968), affd. per curiam 412 F.2d 201 (2d Cir. 1969); sec. 1.274-           
          5T(a), Temporary Income Tax Reg., 50 Fed. Reg. 46014 (Nov. 6,               
               Expenditures for equipment having a useful life extending              
          beyond the taxable year are capital and are nondeductible as                
          business expenses.  Ryman v. Commissioner, 51 T.C. 799, 802                 
          (1969).  Section 167, however, permits a depreciation deduction             
          for property used in a trade or business.  Depreciation on                  
          tangible property placed in service after December 31, 1986, is             
          determined under section 168 pursuant to the Modified Accelerated           

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