- 14 -
not. We are not required to speculate as to the nature of the
business purpose of any expenditure. See Lingham v.
Commissioner, T.C. Memo. 1977-152. The fact that Randall may
have been dining with a client “is not conclusive of the business
character of the meals, for at least some of these people may
also have been personal friends of * * * [Randall]”. Sanford v.
Commissioner, 50 T.C. 823, 827 (1968), affd. per curiam 412 F.2d
201 (2d Cir. 1969). Therefore, where the business purpose of a
meal with a client is not readily discernable from the record, we
find the expense to be nondeductible.
Applying the foregoing criteria to the restaurant meal
expenses, we find that petitioners have provided adequate
substantiation of restaurant meals costing a total of $6,411.28.
There are six items set forth as other entertainment
expenses. Of the six items, three are not referred to in
Randall’s daily planner. Thus, there is no corroboration of the
stated business purpose. Most importantly, for none of the items
is there any indication that some “business discussion or
activity” was associated with the entertainment. See sec.
274(a)(1)(A), (d); and sec. 1.274-5T(b)(3)(iv) and (b)(4)(iii),
Temporary Income Tax Regs., supra. Therefore, we find that
petitioners are entitled to no deduction for any of the other
entertainment expenses.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
Last modified: May 25, 2011