- 5 -
We accept all of petitioners’ concessions. After
concessions, the deductions still in issue are as follows:
Depreciation $13,232
Office expenses 8,762
Rental expenses 23,170
Meals and entertainment 8,719
Discussion
I. Deductions
A. Introduction
We must determine petitioners’ entitlement to the deductions
still in issue for depreciation, office expenses, rental
expenses, and meals and entertainment. Because petitioners’
principal challenge is substantiating their entitlement to those
deductions, we first set forth the pertinent parts of section
274(d), which sets forth requirements for substantiating certain
deductions:
SEC. 274(d) Substantiation Required.–-No deduction
or credit shall be allowed--
(1) under section 162 or 212 for any traveling
expense (including meals and lodging while away
from home),
(2) for any item with respect to an activity
which is of a type generally considered to
constitute entertainment, amusement, or
recreation, or with respect to a facility used in
connection with such an activity,
* * * * * * *
(4) with respect to any listed property (as
defined in section 280F(d)(4)),
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