WALLISER v. COMMISSIONER 72 T.C. 433 (1974) CASE BRIEF

WALLISER V. COMMISSIONER

72 T.C. 433 (1974)

NATURE OF THE CASE: Walliser (P) challenged a deficiency from the denial of a deduction expended by P for foreign travel.

FACTS: P was vice president and branch manager of the First Federal Savings & Loan Association (First Federal) of Dallas, Tex., Richardson branch office. P's primary responsibility was the marketing of permanent and interim loans. P was assigned loan production quotas, and he expected to receive annual raises in his salary if he met his yearly quotas, although First Federal was under no commitment to give P a raise in salary or a bonus if a quota was met. P traveled abroad in tour groups organized primarily for people involved in the building industry. In 1973, P took two such trips. The first was to Rio de Janeiro and was sponsored by General Electric Co. (General Electric). It began on March 23, 1973, and ended on March 31, 1973. Their second trip, to London and Copenhagen, was sponsored by Fedders Co. (Fedders) and ran from October 3, 1973, to October 15, 1973. In 1974, Ps went to Santo Domingo on a tour organized by Fedders which began on September 27, 1974, and ended on October 4, 1974. The majority of the people on the trips were builders and developers from Texas and their spouses. The builders' tours were arranged as guided vacation trips, with sightseeing and other recreational activities. P went on the tours because P found that they provided an unusual opportunity to associate with many potential and actual customers and believed that the tours would generate business, thereby helping him to meet his loan production quotas and obtain salary raises. P spent as much time as possible talking with builders whom he already knew and getting acquainted with builders he had not previously met to make them aware of First Federal's services and of his own skills. His conversations frequently centered on conditions in the building industry and the availability of loans for builders. P did not negotiate specific business transactions on the tours or conduct formal business meetings. Social relationships formed or renewed on the tours between petitioners and builders and their spouses resulted in a substantial amount of loan business for First Federal. D denied the deductions and P petitioned.

ISSUE:

RULE OF LAW:

HOLDING AND DECISION:

LEGAL ANALYSIS:

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