- 7 -
Section 262, however, expressly provides that no deduction
shall be allowed for personal, living, or family expenses. For
each of the years in issue, petitioner claimed a Schedule C
deduction for advertising expenses for Herbalife products she
purchased. However, petitioner personally consumed the majority
of the Herbalife products she purchased. She also gave away an
undocumented portion of the purchases as samples.
Additionally, in computing her costs of goods sold,
petitioner failed to deduct from her purchases the products she
consumed personally or gave away. As a result, petitioner's
costs of goods sold are improperly inflated. As detailed supra,
petitioner deducted these same amounts as advertising expenses.
To allow petitioner not only to report these amounts as
costs of goods sold but also to deduct them as advertising
expenses would allow her "the practical equivalent of double
deduction." United States v. Skelly Oil Co., 394 U.S. 678, 684
(1969); Charles Ilfeld Co. v. Hernandez, 292 U.S. 62, 68 (1934);
United Telecomm., Inc. v. Commissioner, 589 F.2d 1383, 1388 (10th
Cir. 1978), affg. 67 T.C. 760 (1977) and 65 T.C. 278 (1975).
As this Court has previously held, "The Code 'should not be
interpreted' to allow double deductions for the same amount
'absent a clear declaration of intent by Congress,' * * * and we
do not think section 162(a) reflects any such intent." Brenner
v. Commissioner, 62 T.C. 878, 885 (1974) (quoting United States
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
Last modified: May 25, 2011