![]() No such deduction is allowed unless the taxpayer substantiates, by adequate records or by sufficient evidence corroborating his own statements, the amount, time and place, and business purpose for each expenditure. Section 274(d) provides a higher substantiation requirement for the M&E deduction: To be deductible the expense has to be ordinary and necessary for the taxpayer’s business. The meal and entertainment expense deduction (“M&E deduction”) is allowable pursuant to the ordinary and necessary business deduction. The taxpayer was not able to convince the IRS Office of Appeals that the expense was allowable, so the taxpayer litigated the case with the U.S. ![]() This included disallowing the taxpayer’s meal and entertainment expenses. On audit by the IRS, the IRS proposed several adjustments. The IRS selected his tax return for audit. The taxpayer worked from home for both jobs. Petitioner reported no income from his services for IHC but claimed business deductions for travel expenses and meals and entertainment expenses in connection with IHC. IHC’s business purpose was to develop a network of high quality hospitals in Lagos, Nigeria. ![]() also performed real estate investment consulting for Integrated Health Centers (IHC). He had a full time job and his employer paid him commissions as a contractor rather than an employee. The taxpayer is an real estate investment banker. They had a time share in Nevada.Īfter divorcing, the taxpayer moved to New York and then New Jersey. The taxpayer and his wife and son lived in California. The facts and history of this case are unremarkable. 2 Meal & Entertainment Expense Deduction.
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