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Dallas apartment of approximately $1,000 a month from September
1993 until April 1994.
2. Section 162(a)(3)
In pertinent part, section 162(a)(3) provides:
There shall be allowed as a deduction [in
computing taxable income] all the ordinary and
necessary expenses paid or incurred during the taxable
year in carrying on any trade or business, including-–
* * * * * * *
(3) rentals or other payments required to be
made as a condition to the continued use or
possession, for purposes of the trade or business,
of property to which the taxpayer has not taken or
is not taking title or in which he has no equity.
3. Arguments of The Parties
Petitioner argues: “The rental of minimum office space at a
reasonable cost in a major revenue producing location is clearly
an ordinary and necessary expense.”
Respondent argues:
[T]he evidence shows that * * * [petitioner’s] payment
of Norman Duquette’s condominium fees for the Texas
home was merely the payment of the Duquette’s personal
living expenses. * * * [petitioner’s] payment of such
condominium fees is a constructive dividend to Norman
Duquette. It was not an ordinary and necessary
business expense for * * * [petitioner] to pay the
condominium fees for the Duquette’s home. Therefore,
the expense must be disallowed.
4. Discussion
In Greenspon v. Commissioner, 23 T.C. 138 (1954), we dealt
with a corporation taking deductions for expenditures on the home
of its dominant stockholder and chief executive officer. We
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