7 The compensation committee must be composed of two or more outside directors and must also certify performance before the compensation is paid. See 26 U.S.C. § 162(m)(4)(C). 8 A copy of Section 1.162-27 of the Treasury Regulations issued by the United States Department of the Treasury, 26 C.F.R. §1.162-27, is attached to the Biffar Decl.

In comparing the tax returns to Mr. Hart’s handwritten spreadsheets, the Court agrees that the United States has shown that Mr. Hart has failed to produce sufficient evidence to demonstrate his entitlement to the claimed deductions that do not at least appear on both the spreadsheets and the check register. See Sparkman, 509 F.3d at 1159; Meridian Wood, 725 F.2d at 1188 (absent substantiation of date, place, amount, business purpose, and business relationship, under § 274(d), entertainment expense deductions are disallowed); see also 26 U.S.C. § 162(a) (permitting deduction of certain “ordinary and necessary” business expenses); 26 U.S.C. §§ 274(d), 280F(d)(4)(A)(iv) (setting forth substantiation requirements for claimed deductions for travel, entertainment, and computer expenses); MEMORANDUM DECISION AND ORDER - 17 Case 2:11-cv-00513-EJL Document 104 Filed 06/06/13 Page 17 of 39 26 U.S.C. § 280A(c)(1) (setting forth limited business use exceptions to general prohibition on deductions with respect to taxpayer's residence). Based on his own deposition testimony, Mr. Hart’s record keeping system consisted of him separating his personal and business expenses on these handwritten spreadsheets.

When a business creates a “captive” insurance company to protect against certain risks, the Internal Revenue Code permits the insured business to deduct from their income the premium payments made to the captive, thereby lowering their tax liability. 26 U.S.C. § 162(a); 26 C.F.R. § 1.1162-1(a). If the captive that receives those payments elects to be taxed under 26 U.S.C. § 831(b), it can exclude those premiums from income, which reduces the captive’s tax liability.

And Plaintiffs can offer nothing to suggest that Owens Corning’s ability to support 20 Pre-tax income is the relevant measure of an employer’s ability to fund an ERISA plan because employer contributions to an ERISA plan are tax deductible. See 26 U.S.C. §§ 162(a)(1), 404(a); 26 C.F.R. § 1.404(a)-1(b).

13 Case 5:07-cv-00117-FL Document 36 Filed 01/26/09 Page 13 of 25 necessary" for a "trade or business." I.R.C. § 162(a). To be engaged in a "trade or business," the taxpayer's "primary purpose for engaging in the activity must be for income or profit.

2). Drivers who opt out receive a slightly higher mileage rate – 3 Employees who travel for business are permitted to take deductions from their federal taxes for meal expenses, so long as the deductions are substantiated.See 26 U.S.C. § 162(a); 26 C.F.R. § 1.274- 5(2)(iii).

Cir. 2008) ...................................................................... 11 Statutes 26 U.S.C. § 162(m) ............................................................................................ 10, 12 26 C.F.R. §1.162-27(e)(2)(vi)(A) .............................................................................. 9 COOLEY LLP ATTO RN EY S AT LA W SA N FRA N CI S CO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES (continued) Page iv. CASE NO. 13CV2959 JAH NLS REPLY ISO MOTION TO DISMISS 26 C.F.R. §1.162-27(e)(4)(i) ..................................................................................... 9 Other Authorities Fed. R. Civ. P., 12(b)(6) ......................................................................................................... 12, 13 23.

(Emphasis added.) 26 U.S.C. § 162(m)(3). Plaintiff asserts that “McMahon was at all times pertinent to this action a ‘covered employee’ as that term is defined within Section 162(m).”

Eibeler, No. 06 Civ. 688 (SWK), 2006 WL 2849783 (S.D.N.Y. Oct. 4, 2006) ..............................................................................................4 Thom v. U.S., 283 F.3d 939 (8th Cir. 2002)....................................................................................8 Thorpe v. Cerbco, Inc., C.A. No. 11713, 1993 WL 35967 (Del. Ch. Jan. 26, 1993) .................. 1-2 Tooley v. Donaldson, Lufkin, & Jenrette, Inc., 845 A.2d 1031 (Del. 2004) ...............................1, 2 Tracinda Corp. v. DaimlerChrysler AG, 364 F. Supp. 2d 362 (D. Del. 2005), aff’d, 502 F.3d 212 (3d Cir. 2007)..............................................................................................................9 U.S. v. Hill, 506 U.S. 546 (1993) ....................................................................................................8 Statutes & Rules Section 14(a) of the Securities Exchange Act of 1934 .......................................................... passim I.R.C. § 162(m) ......................................................................................................................5, 8, 10 Other Authorities 26 C.F.R. § 1.162-27(e)(4)(i)...........................................................................................................5 26 C.F.R. § 1.162-27(e)(4)(vi).....................................................................................................6, 7 Case 1:11-cv-00217-BMS Document 47 Filed 06/02/11 Page 4 of 17 PageID #: 520 iv EXPLANATION OF CITATION FORMS The following citation forms are used in this brief:  “Defs. Br.”