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entertainment; (6) gifts, awards, or cash; (7) clothing; (8)
equipment and furnishings; (9) contributions; and (10) promotion
or marketing.
A. General Rules
Deductions are a matter of “legislative grace”, and “a
taxpayer seeking a deduction must be able to point to an
applicable statute and show that he comes within its terms.” New
Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934); see also
Rule 142(a). As a general rule, section 162(a) authorizes a
deduction for “all the ordinary and necessary expenses paid or
incurred during the taxable year in carrying on any trade or
business”. An expense is ordinary for purposes of this section
if it is normal or customary within a particular trade, business,
or industry. Deputy v. du Pont, 308 U.S. 488, 495 (1940). An
expense is necessary if it is appropriate and helpful for the
development of the business. Commissioner v. Heininger, 320 U.S.
467, 471 (1943). Section 262, in contrast, precludes deduction
of “personal, living, or family expenses.”
The breadth of section 162(a) is tempered by the requirement
that any amount claimed as a business expense must be
substantiated, and taxpayers are required to maintain records
sufficient therefor. Sec. 6001; Hradesky v. Commissioner, 65
T.C. 87, 89-90 (1975), affd. 540 F.2d 821 (5th Cir. 1976); sec.
1.6001-1(a), Income Tax Regs. When a taxpayer adequately
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