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Chocolate Company

Essay by   •  October 24, 2012  •  Case Study  •  581 Words (3 Pages)  •  1,322 Views

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Facts: Jasmine's Delights is a fine chocolate company in New England area. Allison Hoffman, the president of the company, is planning some corporate event in culture cities in order to prompt her business. For example, she plans to sponsor a Boston Symphony Orchestra night. There will be a reception afterwards featuring her fine chocolates. Also, she would like to invite some of her existing and potential customers to the event to prompt her business.

Issue: Can Allison deduct the event expenses and the entertainment expenses for her clients?

Authorities: IRC Sec. 162(a)

IRC Sec. 274(a)(1)(A)

IRC Sec. 274(d)(2)

IRC Sec. 274(n)

Reg. ยง1.162-1

Rev. Rul. 63-144, 1963-2 CB129

DKD ENTERPRISES v. COMM., Cite as 110 AFTR 2d 2012-5258, 07/17/2012

CAO v. COMM., Cite as 77 AFTR 2d 96-1113 (78 F3d 594), 2/29/1996

Charles A. Dun Leavay, TC Memo 1965-163, 06/21/1965

Kenneth W. Brown, TC Memo 1992-40

Kevin P. Osborne v. Commissioner, TC Memo 2002-11

CHURCHILL DOWNS, INC. AND SUBS. v. COMM., Cite as 90 AFTR 2d 2002-6615 (307 F3d 423), 10/08/2002

Conclusion: As long as Allison can prove the event and entertainment expenses are ordinary and necessary for her chocolate business, and the amount is reasonable, substantial authority supports her deduction of the event expense at reasonable amount and the entertainment expenses at 50% level.

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