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Amos is a computer consultant and his office is located in Orange, Ca. He and his wife Susan used their Lear Jet which they had purchased for 2Million, 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 operated in business like fashion. Amos ans Susan nearly 2Million remodeling the Tahiti house and related property they travel to Tahiti twice a year stay there for several weeks each time. They travel to Park city to go skiing. The annual cost of operating the Lear jet including deprecation is $700,000.
On their tax return Amos and Susan deducted $700,000 as a business expenses under section162. An IRS agent countered that this expense was not ordinary and necessary or that it was a personal expense. Therefore, she disallowed the deduction. Evaluate the position taken by Amos and Susan and suggest your advice for their meeting with the IRS.
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