Kevin P. Osborne - Page 3

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               Petitioner claimed meal and entertainment expenses of $1,720           
          in 1996 and $1,274 in 1997.  Subtracting 50 percent of these                
          expenses pursuant to the section 274(n) limitation, he claimed              
          deductions of $860 and $637, respectively.  Separately from these           
          deductions, petitioner also claimed deductions for “business                
          promotion” in the amounts of $2,544 and $2,120.  In the statutory           
          notice of deficiency, respondent disallowed half of each of the             
          business promotion deductions.                                              
               Generally, expenses which are ordinary and necessary in                
          carrying on a trade or business are deductible.  Sec. 162(a).               
          However, subject to exceptions not applicable here, a deduction             
          for any expense related to food, beverages, entertainment,                  
          amusement, or recreation is limited to 50 percent of the amount             
          of the expense.  Sec. 274(n).  “Entertainment” includes                     
          entertainment, amusement, or recreational activities at golf and            
          country clubs.  Sec. 1.274-2(b)(1)(i), Income Tax Regs.                     
               Respondent argues that the business promotion deductions are           
          subject to the 50-percent limitation because they are for meal              
          and entertainment expenses; namely, restaurant and golf-related             
          expenses.  A summary prepared by petitioner’s representative                
          during the audit of petitioner’s return lists the amounts                   
          constituting the total deduction claimed in 1996.  The majority             
          of the expenses were in fact from restaurants and a country club.           
          The remaining expenses are of an unknown nature; petitioner did             

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