A.J. Concrete Pumping, Inc. - Page 25




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          machine parts, $13,233 for fuel costs, and $11,412 for traveling            
          expenses.  Petitioner claimed that the amounts paid on behalf of            
          Olympic were petitioner’s ordinary and necessary business                   
          deductions.                                                                 
               Whether a corporation may deduct the expenses it pays for              
          the benefit of another corporation turns in large part upon the             
          relationship of the corporations.  In Oxford Dev. Corp. v.                  
          Commissioner, T.C. Memo. 1964-182, the Court held that a                    
          corporation paying the expenses of another could not deduct those           
          expenses because they were the expenses of another corporation              
          and not its own.  However, in Coulter Elecs., Inc. v.                       
          Commissioner, T.C. Memo. 1990-186, affd. 943 F.2d 1318 (11th Cir.           
          1991), the Court allowed a parent to deduct the expenses of a               
          subsidiary corporation.  In Austin Co. v. Commissioner, 71 T.C.             
          955, 967 (1979), the Court stated:  “Expenses incurred for the              
          benefit of another taxpayer are clearly not deductible under                
          section 162, * * * but if the taxpayer pays the expense of                  
          another for its own proximate and direct benefit, a deduction may           
          be allowable.”                                                              
               Petitioner claims that amounts paid on behalf of Olympic               
          were ordinary and necessary business deductions.  Respondent                
          argues that petitioner had no equity ownership in Olympic, and              
          the only relationship between petitioner and Olympic was that               
          stock in both companies was owned by Bone and Guerrero.                     






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