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decided on the basis of all of the facts and circumstances.
Commissioner v. Heininger, 320 U.S. at 475; Hearn v. Commissioner,
309 F.2d at 431; Brizell v. Commissioner, 93 T.C. 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. at 495-496. An
expense is necessary if it is "appropriate and helpful" to the
operation of the taxpayer's trade or business. Welch v. Helvering,
290 U.S. at 113.
Management expenses are among the items included in business
expenses. Sec. 1.162-1, Income Tax Regs. The test of deductibility
of payments made for services is whether the payments are reasonable
and are in fact payments purely for services which are actually
rendered. Achiro v. Commissioner, 77 T.C. at 903; sec. 1.162-7(a),
Income Tax Regs. What matters is the nature of the services
performed, and not the label put on them by the payor and the payee.
Estate of Boyd v. Commissioner, 76 T.C. at 658 (and cases cited
therein). Petitioners bear the burden of proving what portion of
the fees is allocable to deductible expenses. Id.
Petitioners argue that the amounts labeled as management fees
paid from Powertex to Plus are deductible under section 162 as
ordinary and necessary business expenses. Petitioners contend that
Plus provided substantial, regular, and valuable management
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