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clients or other business contacts for rides on San Francisco
Bay. He taught one client, a Mr. Labruzzo, how to operate one of
the boats.
We conclude that, because the boats meet the objective
criteria for entertainment facilities under section 274(a),
amounts expended to lease the boats do not qualify as business
expense deductions.
Petitioner has testified that the boats were used for
substantial business purposes in that he conducted meetings with
clients or potential clients. He maintains that the boats were,
in effect, second offices, the location of which was more
convenient for some clients. Such testimony is unavailing. The
1978 amendment of section 274(a)(1)(B), which is applicable here,
“indicates that any use of the facility, no matter how small, in
connection with entertainment is fatal to the claimed deduction.”
Ireland v. Commissioner, 89 T.C. 978, 983 (1987); see Gordon v.
Commissioner, supra. The legislative history accompanying the
1978 amendment to section 274 recognized “that some legitimate
business expenses may be incurred with respect to entertainment
facilities”. S. Rept. 95-1263 (1978), 1978-3 C.B. (Vol. 1) 321,
472. Congress nevertheless disallowed the deduction of such
expenses in view of the significant opportunities for abuse that
had existed when such deductions were permitted for entertainment
facilities. Id. Moreover, although there are some exceptions to
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