- 4 - (3) Travel, meals, & entertainment: Travel 2,460 Meals & entertainment (80%) 3,017 5,477 Total disallowed expenses $25,528 The stated reason for disallowance of these expenses is that the expenses were not substantiated pursuant to section 274(d). Petitioners challenge that determination.4 With respect to the airplane, since petitioner was not a licensed pilot during 1992, he was required to engage the services of a licensed pilot on the trips he made in connection with his business. Petitioner, however, was also taking flying lessons during 1992, and, on several of his business trips, petitioner engaged his flight instructor as the pilot. Each such flight, however, qualified as a training lesson for petitioner. The bill submitted by the pilot for each of these trips identifies the charge as a fee for flight instruction. Petitioner maintains, however, that such charges were no higher than the costs of a regular pilot. At the same time, petitioner argues, each such trip contributed to his training for 4 Insofar as any of the $25,528 of expenses at issue may be attributable to petitioner's activity as an employee rather than as a self-employed individual, respondent conceded at trial that petitioner qualified as an employee under sec. 3121(d)(3)(B) as a full-time life insurance salesman; therefore, any expenses allocable to petitioner's income as an employee would not be subject to the 2-percent limitation of sec. 67(a). Thus, such expenses would be treated in the same manner as petitioner's self-employed activity expenses.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011