Alan D. Lenzen and Dianne Lenzen - Page 10

                                        - 10 -                                        
          raised by respondent, the burden does not shift to respondent               
          under Rule 142.3                                                            
          II. Corporate Card Charges                                                  
               A.   Ordinary and Necessary Business Expenses                          
               Petitioners contend that the charges at issue qualified as             
          business expenses of RAF.  Section 162 generally allows a                   
          deduction for ordinary and necessary business expenses.  In                 
          general, an expense is ordinary under section 162 if it is                  
          considered “normal, usual, or customary” in the context of the              
          particular business out of which it arose.  Deputy v. du Pont,              
          308 U.S. 488, 495 (1940).  An expense is necessary if it is                 
          appropriate and helpful to the taxpayer’s trade or business.                
          Commissioner v. Tellier, 383 U.S. 687 (1966).  If an expenditure            
          is primarily motivated by personal considerations, no deduction             
          for it will be allowed.  See Henry v. Commissioner, 36 T.C. 879,            
          884 (1961).  Deductions are a matter of legislative grace, and              
          the taxpayer bears the burden of proving that it is entitled to             
          any deduction claimed.  Rule 142(a); New Colonial Ice Co. v.                
          Helvering, 292 U.S. 435, 440 (1934).  This includes the burden of           



               3Before and during trial, petitioners made arguments with              
          respect to shifting the burden of proof to respondent under sec.            
          7491.  At the conclusion of trial, petitioners orally moved that            
          the burden be shifted to respondent.  The Court requested that              
          the parties address this issue in their briefs.  For the reasons            
          discussed supra, petitioners’ oral motion will be denied.                   





Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  Next

Last modified: May 25, 2011