Code Section 274 Case Study

To qualify as a deductible business traveler expense per Code Section 274(m)(3), three criteria must be met. The first criterion, Code Section 274(m)(3)(A), is that the spouse must be an employee of the taxpayer, which is unknown based on the information provided. The second criterion, Code Section 274(m)(3)(B), is that the spouse must be traveling for a bona fide business purpose, for which it is determined to not pass this criterion. Ling has other resources that accomplish the services for her. The third criterion, Code Section 274(m)(3)(C), is that the expenses would otherwise be deductible for the spouse. It is determined the expenses do not meet the criteria of a business expense because it is not a bona fide business purpose. Since …show more content…
Rul. 55-57, 1955-1 CB 315, when a wife accompanies her husband on a business trip, her presence must be proved to be for a bona fide business purpose and not just for her leisure. The type of business that the wife is responsible for must be “directly attributable <Page 316> to the husband's business and necessary to the conduct thereof” (Rev. Rul. 55-57). If the wife’s presence is serving a business purpose, it is then to be decided whether it is a bona fide business purpose or just to help with incidental services. “The performance by a wife of some incidental service for her husband, such as the occasional typing of notes or similar service while accompanying him on such trips, does not establish that her presence is necessary to the conduct of his business” (Rev. Rul. 55-57). If the taxpayer cannot prove that their spouse meets the requirements of accompanying persons for a bona fide business purpose, then these expenses cannot be deductible business expenses. In the case of John and Ling, it appears that John’s expenses cannot be proved to meet the requirements of a bona fide business purpose. Although Ling is disabled, John does not contribute directly to Ling’s business. Ling has other resources that can accomplish the same tasks that John performs for …show more content…
State of Maryland, 4 Aftr 4491 (4 Wheat. 316), (S Ct), 02/01/1819 is an influential case in terms of defining the word “necessary”. It can be looked at as “necessary” for the helper to accompany the disabled business traveler on the business trip. “If reference be had to its use, in the common affairs of the world, or in approved authors, we find that it frequently imports no more than that one thing is convenient, or useful, or essential to another” (McCulloch v. State of Maryland). We can use similar terms, such as helpful, convenient and appropriate. When used in relation to our situation, we can say to ourselves that a helper assisting a disabled business traveler is helpful, convenient and appropriate.
Deputy v. Du Pont, 23 Aftr 808 (60 S.Ct. 363), (S Ct), 01/08/1940 is an influential case in the meaning of the word “ordinary.” “Ordinary has the connotation of normal, usual, or customary” (Deputy v. DuPont). Similar words to use can be normal, accepted, expected and common. Is a helper assisting a disabled business traveler normal and common? Yes, it is. Would seeing a helper assisting a disabled business traveler accepted and expected when traveling? Yes, it would be. John’s assistance to Ling can be viewed as

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