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T.C. 239, 258 (1984), affd. without published opinion 786 F.2d
1174 (9th Cir. 1986); see also Schaefer v. Commissioner, T.C.
Memo. 1994-444. Toraya has the burden of establishing that the
payments to Motomi served a business purpose and were reasonable
in amount.
Motomi testified that she maintained an office in her home
to count credit card charges, to calculate the hours worked by
Toraya's employees for preparing the payroll twice monthly, and,
if she had time, to check the waitress tags to make sure they
were added correctly. She stated that she recalled receiving
money from Toraya to reimburse her for her office expenses, but
she could not remember how much she received, when it was paid,
or for which expenses she was reimbursed. Nakamura testified
that Toraya's board of directors authorized him to reimburse
Motomi for the expenses she incurred in establishing an office in
her home in San Bruno, California. Nakamura stated that he
considered the money paid to Motomi to be nontaxable to the Kudos
because it was a reimbursement of her expenses.
Both Motomi and Nakamura testified that Toraya had agreed
to reimburse Motomi for the expenses she incurred in maintaining
an office in her home on Toraya's behalf. There is no evidence
that Toraya agreed to compensate Motomi for her time or efforts
in performing those activities. Consequently, Toraya must prove
that the payments to Motomi reimbursed expenses she incurred on
Toraya's behalf and that they were reasonable. The record,
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