Reference no: EM133544

Question :

Amos is a computer consultant, and his office is situated in Orange, California. He and his wife, Susan, used their Lear jet, which they had bought for $2 million, to travel to their timber farm in Oregon (10 trips), to their Tahiti property (2 trips), to computer symposia 5 trips, and to Park City, Utah (8 trips). The timber farm is performed in a businesslike fashion. Susan and Amos have spent nearly $2 million remodeling the Tahiti house and related property. They travel to Tahiti twice a time and stay there for quite a few weeks each time. They travel to Park City to go skiing. The annual costs of working the Lear jet, adding depreciation, are $700,000 (suppose $200,000 of this is depreciation).

On their tax return, Susan and Amos deducted the $700,000 as a business expense under §162. An IRS agent countered that this expense was not ordinary and required or that it was personal expense. Thus, she disallowed the deduction. Determine the positions taken by Amos and Susan and by the IRS agent with respect to the Lear jet deduction.