14. A taxpayer may not deduct expenses for which it has been reimbursed or for which it has a right to reimbursement. Glendinning, McLeash & Co., v. Commissioner, 61 F.2d 950, 952 (2d Cir. 1932); Estate of Boyd v. Commissioner, 28 T.C. 564, 566 (T.C. 1957) ("It is well settled that expenses for which there exists a right of reimbursement are not ordinary and necessary business expenses[.]"). 15.
Blackburn v. Commissioner, supra. With respect to the Arizona rental property expenses, other than the mortgage interest and real estate taxes, petitioner is entitled to a deduction for one-half of those amounts totaling $1,145.Estate of Boyd v. Commissioner [Dec. 22,410], 28 T.C. 564 (1957). Next, we must consider whether petitioner may reduce his income by one-half of his retirement income.
It is unnecessary to analyze these arguments in light of the facts since petitioner, whether he knew it or not, had a fixed, readily assertable right to payment by CO. This one fact alone makes section 212 inapplicable. Estate of Elmer B. Boyd, 28 T.C. 564, 566 (1957). Cf. Electric Tachometer Corp., 37 T.C. 158 (1961).
Accordingly, those cases are not authority for holding that under the subleasing agreements $5,000 of the amount paid in 1949 constitutes reimbursement to the partnership.Universal Oil Products Co. v. Campbell, (C.A. 7) 181 F.2d 451, certiorari denied 340 U.S. 850; Glendinning, McLeish & Co. v. Commissioner, (C.A. 2) 61 F.2d 950, affirming 24 B.T.A. 518; Levy v. Commissioner, (C.A. 5) 212 F.2d 552, affirming a Memorandum Opinion of this Court; and Estate of Elmer B. Boyd, 28 T.C. 564. The sublease between the partnership and the Aylors was a separate and distinct transaction from the lease between the company and the partnership.
Where a taxpayer makes expenditures under an agreement that he will be reimbursed therefor, such expenditures are in the nature of loans or advances to another or of payment on behalf of another and are not deductible as business expenses of the taxpayer making the payment. Glendinning, McLeish & Co., 24 B.TA. 518, 523 (1931), affd. 61 F.2d 950 (C.A. 2, 1932), and Estate of Elmer B. Boyd, 28 T.C. 564 (1957). However, an otherwise proper deduction should not be disallowed in the year in which it is paid or incurred because of the existence of a possibility that at some future date the taxpayer might receive a reimbursement therefor.