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objective one. Sec. 1.274-2(b)(1)(ii), Income Tax Regs. That
regulation provides:
An objective test shall be used to determine whether an
activity is of a type generally considered to
constitute entertainment. Thus, if an activity is
generally considered to be entertainment, it will
constitute entertainment for purposes of * * * section
274(a) regardless of whether the expenditure can also
be described otherwise * * *. This objective test
precludes arguments such as * * * that an expenditure
for entertainment should be characterized as an
expenditure for advertising or public relations. * * *
There can be no dispute that, objectively, petitioner’s
boats, a cabin cruiser and two other “pleasure boats”, as he
termed them, constitute entertainment facilities. See Rutz v.
Commissioner, 66 T.C. 879 (1976); Nicholls, North, Buse Co. v.
Commissioner, 56 T.C. 1225 (1971); see also Gordon v.
Commissioner, T.C. Memo. 1992-449; Nguyen v. Commissioner, T.C.
Memo. 1989-101. Under an objective test, boats such as
petitioner’s are generally considered to be associated with
recreation. Petitioner's own testimony establishes that he used
the boats at least in some part for providing entertainment to
clients and potential clients. Petitioner has conceded that he
invited clients and potential clients aboard his boats, sometimes
accompanied by their spouses. On board, although some business
discussions may have taken place, petitioner also watched
television with his guests and used the stereo. There were three
sets of binoculars for his guests' use, and occasionally
petitioner served them food and beverages. Petitioner took his
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