Norman E. Duquette, Inc. - Page 17




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          There is no evidence that petitioner had to maintain an extensive           
          library or extensive files for Norman to do his work, or that               
          Norman required a dedicated area in which actually to write his             
          reports.  There is no substantiation of Norman’s claim:  “The               
          Dallas office was used about 10 days a month to deal with                   
          clients”.  Petitioner has failed to convince us that any use of             
          the apartment by Norman to further petitioner’s business was more           
          than incidental to the Duquette’s use of the apartment as a home.           
          Assuming such incidental use, petitioner has failed to show that            
          there was even a market from which to determine what a reasonable           
          rental would be for such incidental use.                                    
               Petitioner has failed to prove that it was required to pay             
          the Dallas apartment rental amount as a condition to the                    
          continued use or possession of a portion of the apartment.                  
          Consistent with the lack of evidence that petitioner’s use of the           
          apartment was anything more than incidental to the Duquettes’ use           
          of the apartment as their home is the conclusion that, if the               
          Dallas apartment amount was paid to or for the benefit of the               
          Duquettes, such payment was not made for business purposes but to           
          distribute to them, as owners of the corporation, profits or                
          funds unnecessary for business operations.  Petitioner has failed           
          to prove that such payment was an ordinary and necessary expense            
          paid or incurred during the 1994 tax year in carrying on                    
          petitioner’s trade or business.                                             






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