Edward E. and Constance M. Thorpe - Page 11

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          1993, Mr. and Mrs. Thorpe made a check payable to ETCO in the               
          amount of $5,334 for their personal use of the automobiles.                 


          Deductions for Travel to Conventions and Auto Expenses                      

               In the notice of deficiency issued to ETCO, respondent                 
          disallowed ETCO's deductions for travel and entertainment                   
          expenses, which were incurred by Mrs. Thorpe during her                     
          attendance at various conventions on behalf of ETCO.  Respondent            
          also disallowed ETCO's deductions for expenses related to the               
          leased automobiles.  Respondent disallowed the travel and auto              
          expenses on the bases that ETCO failed to establish that there              
          was a business purpose for the expenses and, further, that it               
          failed to substantiate some of the claimed expenses in accordance           
          with sections 162, 262, and 274(d).  ETCO, on the other hand,               
          contends that it is entitled to deduct all the claimed expenses.            
               Section 162(a) provides that "There shall be allowed as a              
          deduction all the ordinary and necessary expenses paid or                   
          incurred during the taxable year in carrying on any trade or                
          business".  To be "necessary" an expense needs to be "appropriate           
          and helpful" to the taxpayer's business.  Welch v. Helvering, 290           
          U.S. 111, 113 (1933).  For an expense to be "ordinary", "the                
          transaction which gives rise to it must be of common or frequent            
          occurrence in the type of business involved".  Deputy v. du Pont,           

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