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Martha, a CPA, John, an attorney, Alan, a realtor, and Ivana, a Physician, maintain private practices in the same business community. During the year, they get together for lunch at least once a week. They take turns paying for the group's lunch. Since they all do business with each other, each claims an entertainment expense deduction for the amount he or she paid for the lunches. Evaluate this practice.
Maples Corp., whose outstanding stock is worth $4 million, has a net operating loss carryforward of $1 million. Maples is owned 45 percent by Alan and 55 percent by Cline, who are otherwise unrelated.
Actual performance under the reduced price structure
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