- 17 -
by Holland America. They insisted that Mr. and Mrs. Dobbe leased
to Holland America the entire property located at 1066 South
Pekin Road, including the Dobbe residence. By reason of its
alleged leasehold interest in the Dobbe residence, Holland
America claimed it furnished lodging and meals on its business
premises to Mr. and Mrs. Dobbe and is entitled to deduct 100
percent of Mr. and Mrs. Dobbe’s personal lodging and grocery
costs as its business expenses.
As we previously held, the written leases in effect for
periods prior to October 1, 1993, did not cover the Dobbe
residence. Although the record establishes that Mr. and Mrs.
Dobbe set aside a portion of their residence as Holland America’s
business office, the record is devoid of any persuasive evidence
establishing that any part of the Dobbe residence actually was
rented by Holland America and, in particular, that any of the
rent paid by Holland America to Mr. and Mrs. Dobbe was
attributable to the residence. With this framework in mind, we
address each of the disputed expense categories.
B. Landscaping (“Advertising” Expense)
Petitioners argued that the entire landscaping expense,
incurred primarily to install landscaping near and surrounding
Mr. and Mrs. Dobbe’s residence, was properly deducted under
section 162. According to petitioners, the new landscaping was
necessary to improve the “first impression” of Holland America’s
Page: Previous 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 NextLast modified: May 25, 2011