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We therefore hold that the Derby, Breeders’ Cup, and
miscellaneous expenses are not excluded by section 274(e)(7) and
(n)(2).
We find no evidence in the record that the Derby, Breeders’
Cup, and miscellaneous expenses for goods and services were sold
by petitioners in a bona fide transaction for an adequate and
full consideration in money or money’s worth. Indeed, the record
indicates that the expenses were borne by petitioner and goods
and services were given without cost to the parties that were
entertained. We therefore hold that the Derby, Breeders’ Cup,
and miscellaneous expenses are not excluded by section 274(e)(8)
and(n)(2).5
We hold that petitioners’ claimed deductions for Derby,
Breeders’ Cup, and miscellaneous expenses are limited by
section 274(n)(1) as determined by respondent. In reaching the
4(...continued)
which it makes available for a period of time each week
to children participating in a local public
recreational program, the portion of the expense
relating to such public use of the pool will come
within this exception.
5 Petitioners place reliance on the treatment afforded a
casino that provided comps to selected members of the general
public in Priv. Ltr. Rul. 96-41-005 (June 27, 1996). Based on
the letter ruling petitioners argue that the Derby, Breeders’
Cup, and miscellaneous expenses should be deductible in full. We
are unpersuaded that the reasoning used therein is applicable to
the present situation. We also note that the precedential value
of letter rulings is specified in sec. 6110(k)(3), which provides
in pertinent part: “a written determination may not be used or
cited as precedent.”
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