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c. Entertainment and Business Meals
On the Schedule A attached to the proposed Form 1040,
petitioner asserts that he is entitled to a deduction of 50
percent of his meals and entertainment expenses, which he
calculated to be $977. To substantiate this deduction,
petitioner offered receipts from various convenience stores,
video rental stores, entertainment venues, and restaurants, as
well as his electricity bills for 2003. Petitioner estimates
that he entertained about 100 potential customers or employees at
his home during 2003. He also occasionally bought lunch, sodas,
and snacks for employees in order to meet The Men’s Warehouse’s
corporate goal of establishing a “high-quality work environment”.
Petitioner paid for these expenses out of his own pocket even
though he had a discretionary budget for such entertainment
expenses and it was not a common practice for managers to spend
such a high amount for food and beverages for employees.
d. Cable Television and Telephone
Petitioner also seeks to deduct $523.44 for his home cable
television and $619.07 for his home telephone for 2003 after
conceding that 10 percent of his telephone use was for
nonbusiness purposes. Petitioner used the cable to determine
whether the weather was too severe to open the store, and he used
the telephone service to make himself available in case of an
emergency and to enable him to make long-distance calls to his
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Last modified: November 10, 2007