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consideration was necessary as to whether the expense really
benefited petitioner. Respondent’s adjustments raise few
questions of law. They raise questions of fact; indeed, of
judgment. Norman exercised poor judgment. He had been a
Government auditor, and he had passed his C.P.A. exams.
Undoubtedly, he understood that he wore more than one hat with
respect to his corporation, as shareholder, director, and
employee, and that an expenditure to benefit a shareholder
directly is not a deductible corporate expense. There is ample
evidence that Norman abused his dual status, exploiting his
director and employee roles in order to shortchange the tax
collector; for example, by deducting dinners at expensive
restaurants to discuss with his wife matters over which he had
complete control or deducting as corporate relocation expenses
personal costs incident to his divorce and his wife’s relocation
to Florida. See also supra note 8, in which we report Norman’s
concession that he billed petitioner for personal expenditures.
Also, contrary to petitioner’s claim, it did not keep adequate
and full records. Except as stated in the next paragraph,
petitioner has failed to convince us that it did not act
negligently with respect to any of the adjustments it here
contests.
Petitioner has not argued that the negligence penalty should
not be sustained for adjustments that petitioner conceded. We
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