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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,
1985).
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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Last modified: May 25, 2011