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to the fact that respondent would bear the burden of proving, by
clear and convincing evidence, that the payments were illegal and
that the other requirements for disallowance under section 162(c)(2)
are satisfied. Brizell v. Commissioner, 93 T.C. 151, 161 (1989);
sec. 1.162-18(b)(4), Income Tax Regs. In any event, in the instant
case, we need not examine the legality of the payments to SCS.
Deductions are a matter of legislative grace, and a taxpayer
seeking a deduction must meet every condition that Congress has
imposed for entitlement to the deduction claimed. New Colonial Ice
Co. v. Helvering, 292 U.S. 435, 440 (1934). To qualify as an
allowable deduction under section 162(a) an item must (1) be paid or
incurred during the taxable year; (2) be for carrying on any trade
or business; (3) be an expense; (4) be a necessary expense; and (5)
be an ordinary expense. Commissioner v. Lincoln Sav. & Loan
Association, 403 U.S. 345, 352 (1971). Whether an expenditure is
ordinary and necessary is a question of fact to be decided on the
basis of all of the facts and circumstances. Commissioner v.
Heininger, 320 U.S. 467, 475 (1943); Hearn v. Commissioner, 309 F.2d
431, 431 (9th Cir. 1962), affg. 36 T.C. 672 (1961); Brizell v.
Commissioner, supra at 156.
In general, an expense is ordinary if it is considered "normal,
usual, or customary" in the context of the particular business out
of which it arose. Deputy v. Du Pont, 308 U.S. 488, 495-496 (1940).
An expense is necessary if it is "appropriate and helpful" to the
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