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landscaping. The landscaping consisted of new grass, trees,
bushes, shrubs, and flowers installed primarily near and
surrounding Mr. and Mrs. Dobbe’s residence. Holland America paid
$35,296 for the landscaping services and deducted this amount as
an “advertising expense” on its FYE 1993 Federal income tax
return.
Groceries
On September 10, 1991, Holland America adopted a corporate
policy that required its officers to be available for duty at all
times in order to discharge their duties properly and to monitor
all activities on the farm, including the maintenance of coolers
to protect bulbs and the overseeing of bulb and flower harvesting
activities. The policy “required the corporation to pay for the
officers meals and lodging in the performance of their duties.”
The policy was approved by Mr. and Mrs. Dobbe, acting in their
capacity as corporate officers, and was memorialized in Holland
America’s corporate minutes. The policy was renewed each year
and was in effect throughout Holland America’s FYE 1993.
Pursuant to the above policy, Holland America reimbursed Mr.
and Mrs. Dobbe in November 1993 for all of Mr. and Mrs. Dobbe’s
groceries purchased from January 1989 through September 1993.
Mrs. Dobbe had initially paid for the groceries by checks drawn
on her personal checking account. The amount reimbursed,
$34,246, represented the cost of groceries for every meal
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Last modified: May 25, 2011