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own statement”: (1) The amount of the expenditure or use; (2)
the time and place of the expenditure or use, or date and
description of the gift; (3) the business purpose of the
expenditure or use; and (4) in the case of entertainment or
gifts, the business relationship to the taxpayer of the
recipients or persons entertained. Sec. 274(d).
In addition to the general business expense deduction rule
of section 162, section 167 authorizes “as a depreciation
deduction a reasonable allowance for the exhaustion, wear and
tear (including a reasonable allowance for obsolescence)--(1) of
property used in the trade or business, or (2) of property held
for the production of income.” Sec. 167(a).
When applying sections 162 and 167 in the context of
particular items of property, the following general framework has
emerged through caselaw. Under either section, the initial
question is whether ownership and maintenance of the property is
related primarily to business or to personal purposes. Intl.
Artists, Ltd. v. Commissioner, 55 T.C. 94, 104 (1970) (and cases
cited thereat); see also, e.g., Richardson v. Commissioner, T.C.
Memo. 1996-368; Griffith v. Commissioner, T.C. Memo. 1988-445.
The answer to this question determines which of three approaches
is appropriate: (1) If acquisition and maintenance of the
property is primarily associated with profit-motivated purposes
and any personal use is distinctly secondary and incidental,
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