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Section 274(e) is entitled “Specific Exceptions to
Application of Subsection (a)”. (Emphasis supplied.) Likewise,
the legislative history contains references to “exceptions” in
describing section 274(e)’s subsections. See H. Rept. 1447,
supra, 1962-3 C.B. at 428; S. Rept. 1881, supra, 1962-3 C.B. at
742. More particularly, in connection with section 274(e), the
legislative history contains the following statement:
The bill contains nine exceptions to the general
disallowance provision * * *. Where an expense falls
within one of the enumerated exceptions, the item will
continue to be deductible to the same extent as allowed
by existing law.
H. Rept. 1447, supra, 1962-3 C.B. at 428; S. Rept. 1881, supra,
1962-3 C.B. at 742. Accordingly, section 274(e) was intended to
except certain categories of deduction from the effect of section
274. Subsequent legislative history also references subsection
274(e) as providing for exceptions. See H. Rept. 99-426 (1985),
1986-3 C.B. (Vol. 2) 1, 118. (“If an exception [from subsection
274(e)] applies, the entertainment expenditure is deductible if
it is ordinary and necessary and if any applicable section 274(d)
substantiation requirements are satisfied.”)
Collaterally, and by way of comparison, section 274(e)(9),
concerning deductions for expenses for nonemployees, contains the
“to the extent that” language. The legislative history
concerning that subsection references subsection (e)(9) as an
exception. See S. Rept. 96-498 (1979), 1980-1 C.B. 517, 545-546.
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Last modified: May 25, 2011