- 6 -
is that Mr. Applegate looked at DriAll's account to see if there
was money available for reimbursement and did not seek
reimbursement because he concluded that DriAll did not have
sufficient funds. Mr. Applegate contends, therefore, that he is
entitled to a deduction for these unreimbursed expenses.
Respondent argues that the disallowed expenses were incurred by
Mr. Applegate on behalf of DriAll and that they are DriAll's
expenses, which may not be deducted by Mr. Applegate as his own
trade or business expenses under section 162.
Mr. Applegate was entitled to reimbursement from DriAll for
the expenses incurred on its behalf. Where such an arrangement
exists, the failure to claim such reimbursement from the
corporation will not convert the corporation's expenses into the
corporate employee's own deductible ordinary and necessary
business expenses. Podems v. Commissioner, 24 T.C. 21 (1955);
Thomas v. Commissioner, T.C. Memo. 1988-505; King v.
Commissioner, T.C. Memo. 1980-373; Ockrant v. Commissioner, T.C.
Memo. 1966-60; Worth v. Commissioner, T.C. Memo. 1961-39.
Had Mr. Applegate requested reimbursement, the agreement by
the corporation to reimburse an employee or officer, coupled with
a failure to reimburse, might have given rise to a debt due from
DriAll to Mr. Applegate for the unreimbursed amount. See Worth
v. Commissioner, supra. The debt would be deductible only in the
year in which it became worthless. Thomas v. Commissioner,
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