Bernardus A. P. Dobbe and Klazina W. Dobbe - Page 20




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          offered little evidence that the landscaping improvements were              
          appropriate or necessary to the maintenance and development of              
          Holland America’s business.  See Commissioner v. Heininger, 320             
          U.S. at 471.  Drive-by customers accounted for a very small                 
          percentage of Holland America’s sales, and there is no evidence             
          in the record demonstrating that sales to Holland America’s                 
          regular customers increased in any material way as a result of              
          the improvements.  At trial, Martin Meskers, a flower grower from           
          Oregon who has purchased bulbs from Holland America since its               
          incorporation and spends about $500,000 per year at Holland                 
          America, testified that the new landscaping was nice and gave a             
          good first impression.  Mr. Meskers admitted, however, that he              
          still would spend the same amount per year even if the                      
          landscaping was not as nice because Holland America carries the             
          product he needs.                                                           
               We hold that petitioners have not proven that the                      
          landscaping expenses were ordinary and necessary business                   
          expenses deductible by Holland America under section 162.                   
               C.  Groceries (“Supplies” Expense)                                     
               In November 1993, Holland America reimbursed Mr. and Mrs.              
          Dobbe in the amount of $34,246 for all groceries purchased for              
          every meal prepared or eaten by the Dobbe family at their home              
          from January 1989 through September 1993.  Holland America                  
          deducted the entire reimbursement as a “supplies” expense on its            






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