- 7 -
is one that relates to a transaction “of common or frequent
occurrence in the type of business involved”, Deputy v. du Pont,
308 U.S. 488, 495 (1940), and a necessary expense is one that is
“appropriate and helpful” for “the development of the
petitioner’s business,” Welch v. Helvering, 290 U.S. 111, 113
(1933).
Respondent has conceded that petitioner incurred a portion
of the deducted expenses, but argues that they are not ordinary
and necessary business expenses. To substantiate the remaining
expenses, petitioner presented checks and check duplicates in
amounts totaling $4,481.42 for payments for rent, utilities, and
office supplies. In addition, he provided credit card statements
on which he made notations indicating the types of certain
expenses, such as gas, lodging, or phone calls. However,
assuming arguendo that we would accept these documents as
adequate substantiation, we find that these expenses (and those
expenses for which respondent has not challenged substantiation)
are not ordinary and necessary business expenses. Petitioner’s
vague and uncertain testimony provided no connection between the
expenses and petitioner’s employment, and it is evident that many
if not all of the expenses are of an inherently personal nature,
nondeductible under section 262(a).
Petitioner argues that his employment in Minnesota was
temporary, and that many of the expenses he incurred and claimed
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
Last modified: May 25, 2011