Jim Wood Land Clearing Co., Inc. - Page 3

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               Respondent determined that for 1993 and 1994, petitioner was           
          not entitled to reduce its gross income by construction expenses            
          relating to the two houses.  At trial, the Court asked Allen Wood           
          why these expenditures were characterized as cost of goods sold.            
          Allen Wood stated that he did not know why and acknowledged that            
          such treatment "could have been wrong".                                     
               We sustain respondent's determination.  The construction               
          expenses related to houses that were built on Allen Wood's                  
          property and ultimately sold by Wood Developers.  In essence,               
          petitioner paid Allen Wood's construction expenses.  See Estate             
          of Briden v. Commissioner, 11 T.C. 1095, 1134 (1948) (stating               
          that a shareholder's personal expenses are not a part of a                  
          corporation's cost of goods sold), affd. 179 F.2d 619 (1st Cir.             
               Petitioner contends, in the alternative, that it is entitled           
          to an advertising deduction for these expenses.  At trial, Allen            
          Wood attempted to establish a nexus between petitioner's business           
          and an advertising deduction by asserting that petitioner's                 
          payment of the expenses was part of a plan to meet local                    
          contractors.  We reject petitioner's contention.                            
               Advertising expenses are deductible if such expenses are               
          "ordinary and necessary".  Sec. 162(a); see sec. 1.162-1(a),                
          Income Tax Regs.  An expense is "ordinary" if it is customary or            
          usual within a particular trade, business, or industry, see                 
          Deputy v. du Pont, 308 U.S. 488, 495-496 (1940), and "necessary"            

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