- 22 -
necessary expenses for the production or collection of income or
for the management, conservation, or maintenance of property held
for the production of income. See sec. 212(a). However, a
taxpayer may not deduct a contribution of capital to a
corporation under section 212. See Conant v. Commissioner, T.C.
Memo. 1986-415. Petitioners may not deduct the claimed advances
under section 212 because they were contributions to the capital
of Cabana Boy.
D. Whether Petitioners May Deduct the Advances as Advertising
or Promotional Expenses for Dr. Rosenberg’s Plastic Surgery
Practice
Petitioners contend that they may deduct the advances as
advertising or promotional expenses for Dr. Rosenberg’s plastic
surgery practice under section 162 because they paid those
amounts to attract patients for Dr. Rosenberg from the motion
picture industry.4 Dr. Rosenberg testified that he paid the
advances to publicize his medical practice. Dr. Rosenberg’s
testimony is not consistent with the objective evidence. In his
curriculum vitae, he listed the articles and television shows in
which he appeared, but he did not mention Cabana Boy or any
Cabana Boy publicity. None of the articles in the exhibit
4 Petitioners contend that they may deduct their advances
under sec. 162 because Dr. Rosenberg made the advances to protect
his credit worthiness or business reputation. We disagree. Dr.
Rosenberg did not so testify. In any event, petitioners have not
shown how paying the claimed advances would protect his credit or
reputation.
Page: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 NextLast modified: May 25, 2011