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CORPORATE TRAVEL EXPENSE DEDUCTION

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The issue considered in this case concerns the payment by a corporation of certain executive travel costs, and the subsequent classification of these costs as corporate expenses deductible from corporate income for purposes of determining federal income tax liability. The alternative approach is the classification of the corporate payment of the costs as a form of income to the executive concerned.

Marian Dixon is the sole owner and chief executive officer of Dixon Industries, Inc. Her physical presence at the offices of the firm is required for all major business decisions. Ms Dixon, on an on-going basis, vacations with members of her immediate family four times each year. These vacations occur at seasonal resorts located a far distance from Dixon Industries and Ms Dixon's permanent residence, each of which is located in the same city.

During Ms Dixon's four 1994 family vacations, she returned from the vacation site to Dixon Industries offices on six separate occasions for the purpose of making business decisions that required her physical presence at the firm's office. All travel costs associated with these six trips were paid by the corporation, which classified the costs as corporate travel expenses deductible for federal income tax purposes. Ms Dixon did not include the payment of these travel costs as a part of her gross income on her personal income tax return for 1994.

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Approximate Word count = 1047
Approximate Pages = 4 (250 words per page)

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