Ronald and Sue M. Leschke - Page 7




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                    (c) Employee Gifts.--                                             
                         (1) In general.--Subsection (a) shall not                    
                    exclude from gross income any amount transferred                  
                    by or for an employer to, or for the benefit of,                  
                    an employee.                                                      
          II.  Application                                                            
               A.  Substantiation Requirements of Sections 162 and 274(d)             
               As a threshold matter, we deal briefly with the question of            
          whether the expenditures at issue have been substantiated as                
          business expenses to an extent sufficient to comply with the                
          requirements of sections 162 and 274(d).  Although respondent               
          makes reference on brief to a lack of substantiation, we are                
          satisfied that the stipulated facts and exhibits meet the                   
          criteria imposed by these sections.                                         
               First, the distributing of gifts or bonuses to customers and           
          employees, particularly at Christmas, has long been accepted as             
          an ordinary and necessary business practice, and we refuse to               
          find otherwise here.  See Danz v. Commissioner, 18 T.C. 454, 460,           
          464 (1952) (stating that bonuses described as “Christmas gifts to           
          employees” were ordinary and necessary expenses), affd. 231 F.2d            
          673 (9th Cir. 1955); Dobbe v. Commissioner, T.C. Memo. 2000-330             
          (holding that the cost of golf clubs given to a foreign                     
          salesman/broker was an ordinary and necessary business expense);            
          Snyder v. Commissioner, T.C. Memo. 1983-692 (finding that the               
          cost of flowers and fruit baskets given out at Christmas time to            





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