Jeffrey C. and Kelly O. Stone - Page 5

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          Essentially, petitioners make the same arguments here as they did           
          before the Board.                                                           
                                     Discussion                                       
               Section 162(a) provides deductions for "all the ordinary and           
          necessary expenses paid or incurred during the taxable year in              
          carrying on any trade or business".  On the other hand, section             
          262(a) provides that "no deduction shall be allowed for personal,           
          living, or family expenses."  To some extent, there is a                    
          connection between an individual's personal expenses and his or             
          her business expenses.  Thus, for example, while routine meals              
          are necessary for an individual to function in the workplace, the           
          expenditure is inherently personal and not deductible under                 
          section 162(a).  To establish the deductibility of an expense               
          under section 162(a), the individual must show more than a                  
          tangential connection with the business:  he or she must show               
          that the questioned expense is "directly connected" with a trade            
          or business.  Sec. 1.162-1(a), Income Tax Regs.  We look,                   
          therefore, to the "origin and character" of the expenses to                 
          determine whether they are deductible under section 162(a).  Fogg           
          v. Commissioner, 89 T.C. 310, 315-316 (1987); see also United               
          States v. Gilmore, 372 U.S. 39, 49 (1963).  Furthermore,                    
          petitioners bear the burden of proof.  Rule 142(a); INDOPCO, Inc.           
          v. Commissioner, 503 U.S. 79, 84 (1992).  With these principles             
          in mind, we turn to the disallowed expenses.                                






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