Sherry v. Commissioner

Tax Court Memorandum Opinion 1975-337 (1975)

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Sherry v. Commissioner

United States Tax Court
Tax Court Memorandum Opinion 1975-337 (1975)

CS

Facts

Henry Sherry (plaintiff), an attorney with a private law practice, owned an airplane he used for both business and personal purposes. During 1970, Sherry flew his airplane approximately 41 hours in total, 25 of which were during two trips from Ohio, where Sherry resided, to Florida. Sherry’s wife accompanied him on both Florida trips, and on the first one the Sherrys were joined by Hugh Hicks, a neighbor and business associate of Sherry’s. During the first Florida trip, Sherry and Hicks spent some of their time exploring the possibility of opening a bank in Florida. The rest of their time—and all of Sherry’s wife’s time—was spent vacationing. The same was true of the Sherrys during their second trip to Florida, which they took without Hicks. Sherry’s remaining 16 flying hours during 1970 were for proficiency flying, personal trips, or business trips. On their 1970 joint federal income-tax return, Sherry and his wife claimed a depreciation deduction for the airplane’s business use and a deduction for the airplane’s current business operating expenses, allocating two-thirds of the use to business purposes and one-third to personal. The commissioner of internal revenue (commissioner) maintained that the airplane’s business use during 1970 was at most only 6.45 percent and assessed the Sherrys a deficiency for the difference. The Sherrys challenged the deficiency in United States Tax Court. Sherry testified that during the first trip to Florida, he had discussions with at least 10 people about the possibility of opening a bank but could remember the names of no more than five. He kept no notes of those discussions and had no record of the amount of time he spent having them. Sherry indicated that during the second trip to Florida, he met with a few prospective bank investors but spent most of his time vacationing. Sherry contended that all his time for the proficiency flights should be deductible as a business expense because those flights were necessary under federal regulations for him to carry passengers on business trips.

Rule of Law

Issue

Holding and Reasoning (Dawson, C.J.)

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