- 11 -
However, petitioner’s claim that the expense in question is
deductible is based principally not on the theory that the
expense is “educational”, but rather on the theory that
petitioner’s “affiliation” with the University was essential for
him to generate business.12
In order for an expense to be deductible as a business
expense, the expense must be ordinary and necessary. See sec.
162(a). An expense is “ordinary” if it is "normal, usual, or
customary" in the taxpayer's trade or business. Deputy v. du
Pont, 308 U.S. 488, 495 (1940) (citing Welch v. Helvering, 290
U.S. 111, 114 (1933)). An expense is "necessary" if it is
"appropriate and helpful". Welch v. Helvering, supra at 113. In
deciding whether an expense is ordinary and necessary, we
generally focus on whether there is a reasonably proximate
relationship between the expense and the taxpayer's trade or
business. See Henry v. Commissioner, 36 T.C. 879, 884 (1961).
Conclusory statements by a taxpayer that the expense was incurred
in pursuit of the taxpayer’s trade or business are not sufficient
12 According to petitioner, when someone needs a Russian
translator:
what they do is they call the university and they try
to find within the university who knows someone there
who can do this. So if I’m not affiliated, my name
will not come up. Usually they call a professor of
Russian, but they could call a lot of people, and
that’s how this business–-the Davis Petroleum business
was generated exactly that way.
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