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Certain Claimed Gifts
Petitioner did not claim any gifts as unreimbursed employee
expenses in the 1999 Schedule A included as part of his 1999
return. At trial, however, petitioner maintained that he is
entitled to deduct as unreimbursed employee expenses for his
taxable year 1999 gifts totaling $1,600 that he claims he gave to
customers and prospective customers of McKendree (claimed gifts).
Section 162(a) generally allows a deduction for ordinary and
necessary expenses paid or incurred during the taxable year in
carrying on any trade or business. A taxpayer is entitled to
deduct under section 162(a) unreimbursed employee business
expenses only to the extent that the taxpayer demonstrates that
such taxpayer could not have been reimbursed for such expenses by
such taxpayer’s employer. Podems v. Commissioner, 24 T.C. 21, 23
(1955).5
Section 274(b) provides:
SEC. 274. DISALLOWANCE OF CERTAIN ENTERTAINMENT, ETC.,
EXPENSES.
* * * * * * *
(b) Gifts.--
(1) Limitation.--No deduction shall be al-
lowed under section 162 or section 212 for any
expense for gifts made directly or indirectly to
any individual to the extent that such expense,
when added to prior expenses of the taxpayer for
5See also Putnam v. Commissioner, T.C. Memo. 1998-285;
Marshall v. Commissioner, T.C. Memo. 1992-65.
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Last modified: November 10, 2007