Although the articulation in the decided cases seems to consider the value of the foreign currency at the time of repayment as one of the two prongs of measurement, the issue of the relevancy of that standard of measurement has, as far as I can determine, never been directly considered. See Gillin v. United States, 191 Ct. Cl. 172, 423 F.2d 309 (1970); KVP Sutherland Paper Co. v. United States, 170 Ct. Cl. 215, 344 F.2d 377 (1965); Bennett's Travel Bureau, Inc. v. Commissioner, 29 T.C. 350 (1957); America-Southeast Asia Co. v. Commissioner, 26 T.C. 198 (1956); Church's English Shoes Ltd. v. Commissioner, 24 T.C. 56 (1955); Willard Helburn, Inc. v. Commissioner, 20 T.C. 740 (1953), affd. 214 F.2d 815 (1st Cir. 1954); Foundation Co. v. Commissioner, 14 T.C. 1333 (1950). Cf. Seaboard Finance Co. v. Commissioner, 20 T.C. 405, 417 (1953), revd. on other grounds 225 F.2d 808 (9th Cir. 1955).
In both cases, the taxpayer remained at risk in foreign currency until it repaid the foreign currency debts, and the ultimate gain or loss could not be determined until repayment of the debts. Cf. Gillin v. United States, supra; Columbian Rope Co. v. Commissioner, 42 T.C. 800 (1964); Bennett's Travel Bureau, Inc. v. Commissioner, 29 T.C. 350 (1957); Foundation Co. v. Commissioner, 14 T.C. 1333 (1950). In no case was there a holding that repayment of the debt would always be required in order to close the foreign loan transaction.
Whether expenditures are for ordinary and necessary business expenses is a question of fact (Commissioner v. Heininger, 320 U.S. 467 (1943)), and the petitioner has the burden of demonstrating that the purpose of the expenditure was primarily business rather than personal and that the business in which the taxpayer is engaged benefited, or was intended to be benefited, by the expenditure. Chapman v. Commissioner, 48 T.C. 358 (1967); Bennett's Travel Bureau, Inc. v. Commissioner, 29 T.C. 350 (1957). In deciding this issue, we first consider the petitioner's deductions for the cost of his wardrobe and its maintenance.
At the outset, we note that it is well settled that a deficiency may be approved on the basis of reasons other than those relied upon by the respondent or even where his reasons may be incorrect. Wilkes-Barre Carriage Co., 39 T.C. 839, 845, (1963), affd. 332 F.2d 421 (C.A. 2, 1964); Max Schuster, 50 T.C. 98 (1968); Bennett's Travel Bureau, Inc., 29 T.C. 350, 356-357 (1957), and cases cited therein. Compensation is, of course, ordinary income to the recipient and not capital gain.
is primarily a question of fact, Commissioner v. Heininger, 320 U.S. 467 (1943); James Schulz, 16 T.C. 401 (1951), and the burden of proof is upon the taxpayers. Bennett's Travel Bureau, Inc., 29 T.C. 350 (1957). Petitioners must show that the purpose of the expenditure was primarily business rather than social or personal.
It did not sustain its burden of proving that the decedent did not retain such an interest, and the determination of the respondent must be approved even though the reason assigned by him in the notice of deficiency for the inclusion of the account in decedent's gross estate may not have been strictly accurate. Cf. Helvering v. Gowran, 302 U.S. 238, 245, rehearing denied 302 U.S. 781; Alexander Sprunt & Son, Inc. v. Commissioner, 64 F.2d 424, 427 (C.A. 4); Bennett's Travel Bureau, 29 T.C. 350, 356-357. (c) Savings Bonds.