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Section 162 generally allows a deduction for ordinary and
necessary business expenses. In general, an expense is ordinary
under section 162 if it is considered "normal, usual, or
customary" in the context of the particular business out of which
it arose. Deputy v. du Pont, 308 U.S. 488, 495 (1940).
Ordinarily, an expense is necessary if it is appropriate and
helpful to the taxpayer's trade or business. Commissioner v.
Tellier, 383 U.S. 687, 689 (1966); Carbine v. Commissioner, 83
T.C. 356, 363 (1984), affd. 777 F.2d 662 (11th Cir. 1985). Even
if an expense is ordinary and necessary, it is deductible under
section 162 only to the extent it is reasonable in amount. See,
e.g., United States v. Haskel Engg. & Supply Co., 380 F.2d 786,
788-789 (9th Cir. 1967).
In deciding whether an expense is ordinary and necessary
within the meaning of section 162, courts generally focus on the
existence of a reasonably proximate relationship between the
expense and the taxpayer's business and the primary motive or
purpose for incurring the expense. See, e.g., Greenspon v.
Commissioner, 229 F.2d 947, 954-955 (8th Cir. 1956), affg. on
this issue 23 T.C. 138 (1954); Henry v. Commissioner, 36 T.C.
879, 884 (1961); Larrabee v. Commissioner, 33 T.C. 838, 841-843
(1960). In general, where an expenditure is primarily for
profit-motivated purposes, and personal benefit is distinctly
secondary and incidental, it may be deducted under section 162.
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