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Costs of security at the corporate property are deductible
as a business expense under section 162. On audit, after
extensive review of documentation, respondent allowed deductions
on this basis of $91,372 in 1997 and $24,267 in 1998 that the
record reasonably permitted to be identified and allocated to the
corporate property. Respondent later stipulated the concession
of an additional $1,100 for 1997, the nature of which has not
been further explained. Petitioners do not directly allude to
any particular charges disallowed that were in fact attributable
to the corporate premises and not so characterized by respondent.
However, as detailed below in connection with our investigation
of petitioners’ complaint regarding security on a trip to Puerto
Rico, the Court has concluded that an additional deduction for
security on the corporate premises is appropriate.
Costs of securing residential property are generally
nondeductible under section 280A for the reasons previously
discussed in conjunction with petitioners’ claims regarding
capitalized improvements and landscaping. Mr. Deihl testified
that security services were utilized at petitioners’ home only
during the latter part of 1996 and early 1997, but this testimony
is patently contrary to the documentary evidence. Invoices
explicitly show charges for security at the house into at least
March of 1998, and the record lacks substantiation or explanation
for a number of expenditures beyond that date. Mr. Deihl’s
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