Court Opinion

ID: 4608018
Source: CourtListenerOpinion
Date Created: 2020-11-20 19:41:53.384673+00
Date Added: 2024-06-11T07:53:38.210516
License: Public Domain

William D. and Susan E. Preston v. Commissioner.Preston v. CommissionerDocket Nos. 84162 and 88529.United States Tax CourtT.C. Memo 1961-250; 1961 Tax Ct. Memo LEXIS 100; 20 T.C.M. 1304; T.C.M. (RIA) 61250; August 31, 1961William D. Preston, pro se, 105 Avenue C West, Barksdale A.F.B., La. John W. Dierker, Esq., for the respondent.  SCOTT Memorandum Opinion SCOTT, Judge: The respondent determined deficiencies in petitioners' income tax for the years 1957 and 1958 in the amounts of $376.42 and $153.34, respectively. The sole issue for decision is whether petitioners are entitled to deduct amounts expended by them for club dues and expenses, meals and other refreshments for themselves and guests, nursery charges for care of their children during social functions, and similar items as ordinary and necessary business expenses for entertainment. All1961 Tax Ct. Memo LEXIS 100">*101  of the facts have been stipulated, some by written stipulation and others by oral stipulation of the parties at the trial, and are found accordingly. Petitioners, husband and wife, filed joint income tax returns for the years 1957 and 1958 with the district director of internal revenue at Baltimore, Maryland. William D. Preston (hereinafter referred to as petitioner) is a colonel in the United States Air Force. He is a medical officer on active duty. During the years 1957 and 1958 petitioner served as Commander of the 4230th United States Air Force Hospital and in two other capacities as division surgeon of the Fourth Air Division and the base surgeon. For portions of these years, he also served as Commander of the 376th Tactical Hospital and as Commander of the 301st Tactical Hospital. Petitioner incurred expenses for entertainment in the amount of $1,098.08 in 1957 and $466.11 in 1958. During the years 1957 and 1958 petitioner expended for the items indicated amounts as follows: DateFunctionCost1957Jan. 9Club charges$ 19.9510Medical wives' coffee.7512Dinner party for Hospital Department Heads and Base Commander (12guests)67.60Flowers… $ 5.00 Maid… $11.60Liquor… 22.00 Nursery fees for peti-Food… 20.00 tioner's two chil-Waiter… 6.00 dren during party… 3.0025Nursery fee for children during Air Base Group party1.4026Cocktail party for 16 members of hospital staff34.95Liquor… $25.00 Canapes, etc…. $3.00Flowers… 5.00 Nursery… 1.95Feb. 1Club charges14.00Air Base Group party, Jan. 25… $5.00Wives club luncheon… 1.25Club dues… 7.75Feb. 4-7Visit of USAF Medical Inspection TeamFeb. 4 - Cocktails and dinner for key personnel of team9.00Cocktails… $5.00Canapes… 1.00Nursery fees… 3.00(Club charges below)Feb. 6 - Dinner party for team members (17 people)68.20Waiter… $7.00 Food… $22.00Maid… 7.20 Liquor… 20.00Cook… 3.50 Ice….50Flowers… 5.00 Nursery… 3.00Feb. 7 - Reception at club (pro rata share)5.00Nursery3.00Feb. 14376th Wing coffee.7522Nursery charges during organizational party3.00(Club charges below)Mar. 1Club charges$ 20.307Cocktail party and dinner for consultant from USAF Headquarters (din-ner charges on club bill below)Liquor, canapes, etc.4.85Nursery charges2.008Medical party (pro rata share)4.00Nursery3.0014Coffee for medical wives (45 people)26.52Flowers… $6.00 Rolls (bakery)… $3.72Punch….60 Rolls (homemade)… 3.00Coca cola….50 Mints… 1.00Coffee….86 Silver polish….29Cream….50 Maid service… 9.00Nursery… 1.0523Nursery fees during 4th Air Division party3.00Apr. 1Luncheon for visiting physicians8.007Club charges21.1527Holiday in Dixie Benefit Fashion Show at Barksdale - Tickets. Share inentertainment of local guests (See club charges)10.00Nursery3.00May 3Nursery charges during 376th Wing staff dinner and dance3.0025Medical party (pro rata share)4.00Nursery3.0028Club charges19.00June 3Club charges19.954Nursery charges during 376th Wing staff dinner2.007Air Base Group barbeque4.00Nursery fee2.009-12Visit of Deputy Surgeon General of Thailand to Barksdale15.00June 9Lunch… $ 3.00Dinner… 12.00June 10Lunch4.00Party for Base dignitaries, hospital officers and officers of office ofsurgeon, 2nd AF, in honor of visitor123.50Liquor… $75.00 Flowers… $6.00Maid… 8.00 Waiter (tip)… 3.00Ham… 15.00 Nursery fees… 2.65Food and misc…. 13.85 Club charges belowJune 11Lunch and dinner7.00June 12Curry lunch5.0013Medical wives' coffee.7518Dinner for Base and hospital chaplains and Base missioner19.5026Nursery fees during organizational party2.00July 2Nursery fees during 376th Wing staff dinner2.0011Party for departing Chief of Staff, 2nd AF (club charges below)1.00Nursery fees3.00Hospital wives' luncheon1.2514Nursery charges during Base party (club charges below)3.0017Cocktail party and dinner for departing Base Commander (assessment)(club charges below)2.50Nursery fees3.0022Club charges80.0023Luncheon for visiting consultant and hospital staff members16.00Aug. 2Pertinent portions of club bill26.377376th Wing staff dinner8.00Nursery fees2.008Hospital wives' tea.7529Luncheon for visiting psychiatric consultant and staff members12.50Dinner for visiting psychiatric consultant and staff members28.00Club bill19.0531Nursery charges during organizational party2.00Sept. 3Nursery charges during 376th Wing staff dinner$ 2.0010Dinner for visiting doctor20.60Nursery fee2.0012376th Wing coffee1.0012Hospital wives' luncheon.7513Air Base Group dance4.00Nursery charges2.00Oct. 10805th Air Base Group coffee.7514Club bill19.0515Coffee for departing officers' wives (32 people)15.0017Hospital wives' coffee.7522Cocktail and dinner party for departing Commander General, 2nd AF (17people)85.0024Nursery charges during 2nd AF Commanders' conference dinner2.50Nov. 1Hospital hayride and barbeque8.79Charge… $6.00Nursery… 2.15Gas….643Cocktails and dinner for visiting officer (9 people)10.507Florentine club bill10.009Nursery during 376th Wing party1.9014Hospital wives' luncheon1.5518Club bill19.7530Cocktail party for departing Division Commander35.00Base dinner party for departing Division Commander8.00Nursery charges2.15Dec. 1Club charges29.007Dinner for visiting doctor13.6512Hospital wives' coffee.7515Nursery during 301st Wing Christmas party1.9015301st Wing Christmas party4.0021Nursery during 4AD-Air Base Group Christmas party2.1525Sherry party for members of hospital staff10.0028Hospital party4.00Nursery fee2.05Total for 1957$1,098.08Date1958Jan. 1Open house at residence for hospital officers and spouses (73 officers)$ 64.848Officers' wives club luncheon1.2516Medical wives' breakfast.7516Air Base Group game day - contribution1.0021Air Base group party3.74Nursery during party1.4031301 Bomb Wing dance5.00Nursery during dance1.25Feb. 1Chamber of Commerce - Barksdale luncheon10.0012Officers' wives club luncheon1.2515Air Base Group dance5.00Ticket… $2.50Other… 2.5020Medical wives' luncheon (paid for reservation not used for which groupliable)2.54Mar. 64AD-Air Base Group coffee.508301st Wing cocktail party, dance, gift for departing Commander10.00Nursery charges2.4512Officers' wives club luncheon1.2519Medical wives' luncheon (paid for unused reservation)2.8022301st Wing farewell dance2.00Nursery charges1.40Apr. 9Officers' wives club luncheon$ 1.2512Air Base Group party6.50Nursery charges2.15Refreshments for decorating committee - Air Base Group party1.10Refreshments - head table - Air Base Group party5.0017Hospital wives' luncheon1.5518Dinner for visiting doctor at officers' club2.90Hospital dinner party4.40Nursery charges1.65May 24Hospital cocktail party5.0029Air Base Group party3.50Nursery charges1.4030Cocktail-buffet at residence for medical consultants and wives, key baseand hospital personnel126.55June 18-19Meals and refreshments for houseguest at residence12.5019Hospital wives' luncheon2.65July 21Hospital dining-in5.0424Hospital wives' coffee.75Aug. 15Command reception and dinner for departing 2nd AF Deputy commander18.6521Hospital wives' breakfast.60Sept. 4Air Base Group coffee.7513Cocktails at residence for visiting Reserve Doctors and wives6.0018Hospital wives' breakfast.6024Officers' wives club luncheon1.25Oct. 16Hospital wives' luncheon1.75Nov. 3Party charge (Air Base Group party not attended)5.50Dec. 2Official luncheon attended by petitioner1.3515Air Base Group dinner3.15Nursery fee1.4018Coffee for medical wives and Commanders' wives25.4022Air Base Group party3.00Nursery fee1.40Jan.-Dec.Officers club dues - $7.00 per month84.00Jan.-Dec.Officers' wives club dues - $0.75 per month9.00Total for 1958$ 466.111961 Tax Ct. Memo LEXIS 100">*102  On their joint income tax return for the year 1957 petitioners deducted the amount of $1,081 with the following explanation: Entertainment required in capacity of Surgeon, BAFB and Commander, 4230th USAF Hospital. No allowance provided. On their joint income tax return for the year 1958 petitioners deducted the amount of $451 with the following explanation: Entertainment required in capacity of Surgeon, BAFB and Commander, USAF Hospital. No allowance provided. Respondent in his notices of deficiency disallowed these deductions with the explanation that such amounts did not constitute ordinary and necessary business expenses within the purview of section 162 of the Internal Revenue Code of 1954, but were personal living and family expenses within the meaning of section 262 of the Internal Revenue Code of 1954. The amounts claimed by petitioners as entertainment expenses fall generally into the categories of club dues, food and drink, attending parties, and nursery fees. The amounts for food and drink were spent for themselves and associates and visitors to the base. Petitioner offered no evidence to show that such expenditures1961 Tax Ct. Memo LEXIS 100">*103  were ordinary or necessary business expenses. Petitioner is an Air Force medical officer and so far as the record shows this is his primary occupation. Petitioner in his brief quotes from books prepared for the guidance of Air Force officers and their wives as to the advisability of entertaining and attending social functions, but none of these documents, or even petitioner's own statements of his understanding of the customs in the Air Force, was offered in evidence. Even if we could assume without proof that entertaining such as petitioner did was customary in the Air Force, the record would be totally devoid of evidence that such expenditures were necessary. Cf.   Nathaniel J. Hess, 24 B.T.A. 475">24 B.T.A. 475, 24 B.T.A. 475">479 (1931), and  Bercaw v. Commissioner, 165 F.2d 521 (C.A. 4, 1948), affirming a Memorandum Opinion of this Court. Generally, dues to a social club are nondeductible personal expenses and substantial evidence is required to support their deduction as a business expense. Western Products Co., 28 T.C. 1196">28 T.C. 1196, 28 T.C. 1196">1218 (1957). Except as specifically provided under special circumstances not here applicable, child care expense is a personal expense. Cf.   Mildred A. O'Connor, 6 T.C. 323">6 T.C. 323 (1946).1961 Tax Ct. Memo LEXIS 100">*104 Entertaining one's associates is ordinarily a personal expense and "the presumptive nondeductibility of personal expenses may be overcome only by clear and detailed evidence as to each instance that the expenditure in question was different from or in excess of that which would have been made for the taxpayer's personal purposes."  Richard A. Sutter, 21 T.C. 170">21 T.C. 170, 21 T.C. 170">173 (1953). Petitioners have failed to establish that respondent erred in his disallowance of the claimed deductions for entertainment expenses. Decision in Docket No. 84162 will be entered under Rule 50, and decision in Docket No. 88529 will be entered for respondent. *Footnotes*. Previous decision was deleted and new decision was added by an official order of the Tax Court dated September 27, 1961 and signed by Judge Scott.↩