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then the taxpayer has received income, even though it may still
be claimed that he is not entitled to retain the money, and even
though he may be liable to restore its equivalent. See North Am.
Oil Consol. v. Burnet, 286 U.S. 417, 424 (1932).
Assuming petitioner was correct in his conduit or agency
argument, he would still have to substantiate that the deposits
made to his account, checks cashed, and checks written on his
account, were not includable in his 2000 income.
However, the record as a whole in the present case leads to
the inescapable conclusion that petitioner was a self-employed
contractor licensed by the city of Chicago during taxable year
2000, and that petitioner was the general contractor of record on
the Wells Fargo Home Mortgage, Inc. rehabilitation loan.
Therefore, it is unnecessary to consider petitioner’s “conduit”
or “agency” argument.
Section 162(a) allows a deduction for ordinary and necessary
business expenses paid or incurred during the taxable year in
carrying on any trade or business. To be “ordinary” the
transaction that gives rise to the expense must be of a common or
frequent occurrence in the type of business involved. Deputy v.
du Pont, 308 U.S. 488, 495 (1940). To be “necessary” an expense
must be “appropriate and helpful” to the taxpayer’s business.
Welch v. Helvering, supra at 113-114.
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