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KOA. KOA’s expenses included its corporate bills and premiums
for key man insurance.
(1) Key Man Insurance
While the record does not contain a copy of the key man
insurance policy, such insurance is generally understood to be
life insurance taken out by a company on an essential or valuable
employee, with the company as the beneficiary, as is the case
here. See Black’s Law Dictionary 945 (8th ed. 2004).
Petitioners are not entitled to deduct the payments representing
insurance premiums.
(2) Vehicle Expense
We now consider petitioner Brody’s claimed vehicle expense
deduction of $5,059. Deductions for travel and transportation
expenses otherwise allowable under section 162(a) are subject to
strict substantiation requirements. See sec. 274(d)(1); sec.
1.274-5T, Temporary Income Tax Regs., 50 Fed. Reg. 46014 (Nov. 6,
1985). The record does not contain any evidence indicating
whether KOA had a reimbursement policy for employee travel
expenses or that petitioner Brody complied with the
substantiation requirements. Respondent’s disallowance of this
deduction is sustained.
(3) Loan/Debt
In general, there is allowed as a deduction “any debt which
becomes worthless within the taxable year.” Sec. 166(a)(1). It
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