- 10 - 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.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
Last modified: May 25, 2011