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evidence corroborating the taxpayer’s own statement (A) the
amount of the expense, (B) the time and place of the use of the
facility, (C) the business purpose of the expense, and (D) the
business relationship to the taxpayer of persons entertained or
using the facility. Sec. 274(d). The taxpayer must establish
that the expenditure was directly related to the active conduct
of the taxpayer’s trade or business. Sec. 1.274-2(a)(1)(i),
Income Tax Regs. An expenditure for entertainment that is
directly related to the active conduct of the taxpayer’s trade or
business is one that meets all of the following requirements:
(1) At the time the expenditure was made the taxpayer had more
than a general expectation of deriving some income or other
specific trade or business benefit; (2) during the entertainment
period, the taxpayer actively engaged in a business meeting,
negotiation, discussion, or other bona fide business transaction,
for the purpose of obtaining such income or other specific trade
or business benefit; (3) in light of all the facts and
circumstances, the principal character or aspect of the combined
business and entertainment was the active conduct of the
taxpayer’s trade or business; and (4) the expenditure was
allocable to the taxpayer and a person with whom the taxpayer
engaged in the active conduct of a trade or business during the
entertainment or establishes that he would have engaged in the
active conduct of trade or business were it not for circumstances
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