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club that was held for and attended by Roach and the races’ other
participants.
Roach sailed in the beer can races with a total crew of 6 to
10 men and/or women, and none of these individuals was
compensated for his or her services on board the Centurion during
these races. Roach’s crew members for the beer can races varied
from week to week and consisted mainly of friends and whoever
else happened to show up at the yacht club for the races. (One
of Roach’s regular crew members at these races was his personal
insurance agent.) The commonality of all of Roach’s crew members
generally was that they enjoyed sailing. Roach considered the
beer can races to be the perfect venue for entertaining clients
and prospective clients, and, on some occasions, he invited
clients or prospective clients of petitioner on board the
Centurion during the beer can races to allow them to experience
the joy of sailing. Roach sometimes videotaped the happenings on
board the Centurion during the beer can races.
During the subject years, Roach also sailed the Centurion
sometimes on weekends. During each of those years, individuals
on board the Centurion took photographs, drank wine and beer, ate
cheese, and discussed personal matters.
On its Federal income tax returns for the subject years,
petitioner claimed the disputed deductions of $159,134 and
$135,834, respectively, as to the Centurion. These underlying
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Last modified: May 25, 2011