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Commissioner, 481 F.2d 872, 876 (2d Cir. 1973), affg. T.C. Memo.
1972-177.
It is axiomatic that to be deductible under section 162, the
business expense must be incurred in the taxpayer's own trade or
business and not the trade or business of another. E.g.,
Interstate Transit Lines v. Commissioner, 319 U.S. 590 (1943);
Deputy v. duPont, 308 U.S. 488 (1940); American Lithofold Corp. v.
Commissioner, 55 T.C. 904, 921-922 (1971); Lohrke v. Commissioner,
48 T.C. 679, 684 (1967). A narrow exception to this rule has been
carved out for situations in which the taxpayer's payment of the
business expenses of another serves to "protect or promote" the
taxpayer's own business. See Lohrke v. Commissioner, supra at 684-
685.
A two-prong test was enunciated in Lohrke in order to
determine whether a taxpayer falls within the narrow "protect or
promote" exception to the general rule against a taxpayer deducting
expenses incurred on behalf of the business of another. First, we
must "ascertain the purpose or motive which cause the taxpayer to
pay the obligations of the other person". Id. at 688; see also
Snow v. Commissioner, 31 T.C. 585, 591 (1958). Second, the
taxpayer must show that the expense is an ordinary and necessary
expenditure in furtherance of its trade or business, not in
furtherance of the trade or business of the other taxpayer. Lohrke
v. Commissioner, supra at 688. The question must be asked: Was the
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