- 10 -
record as a whole, we did not find Roach to be credible. Under
the circumstances, we are not required to, and we do not, rely on
Roach’s testimony to support petitioner’s positions herein.
Ruark v. Commissioner, 449 F.2d 311, 312 (9th Cir. 1971), affg.
per curiam T.C. Memo. 1969-48; Clark v. Commissioner, 266 F.2d
698, 708-709 (9th Cir. 1959), affg. in part and remanding T.C.
Memo. 1957-129; Tokarski v. Commissioner, 87 T.C. 74, 77 (1986).
2. Disputed Deductions
Section 162(a) allows the deduction of “all the ordinary and
necessary expenses paid or incurred during the taxable year in
carrying on any trade or business”. Under that section, a cash
basis taxpayer such as petitioner may deduct an expenditure if it
is: (1) An expense, (2) an ordinary expense, (3) a necessary
expense, (4) paid during the taxable year, and (5) made to carry
on a trade or business. Commissioner v. Lincoln Sav. & Loan
Association, 403 U.S. 345, 352-353 (1971); Lychuk v.
Commissioner, 116 T.C. 374, 386 (2001).
Respondent determined that sections 162 and 274 do not
entitle petitioner to deduct its expenses related to the
Centurion. In order to prevail, petitioner must prove that
determination wrong.5 Rule 142(a)(1); Welch v. Helvering,
5 Sec. 7491(a) was added to the Code by the Internal Revenue
Service Restructuring and Reform Act of 1998, Pub. L. 105-206,
sec. 3001(c), 112 Stat. 727, effective for court proceedings
arising from examinations commencing after July 22, 1998.
(continued...)
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