                          T.C. Memo. 1997-76



                        UNITED STATES TAX COURT



               JAMES E. AND KATHY WALKER, Petitioners v.
             COMMISSIONER OF INTERNAL REVENUE, Respondent



        Docket No. 15451-94.               Filed February 12, 1997.



        Thomas G. Ferguson, Jr., for petitioners.

        William Castor, for respondent.



                          MEMORANDUM OPINION


        DINAN, Special Trial Judge:   This case was heard pursuant

to the provisions of section 7443A(b)(3) and Rules 180, 181, and

182.1


        1
          Unless otherwise indicated, all section references are
to the Internal Revenue Code in effect for the taxable years in
issue. All Rule references are to the Tax Court Rules of
Practice and Procedure.
                               - 2 -

     Respondent determined deficiencies in petitioners' 1990 and

1991 Federal income taxes in the amounts of $2,896 and $1,843,

respectively.

     The sole issue for decision is whether petitioners are

entitled to claim deductions for political contributions as

ordinary and necessary business expenses under section 162.

     Some of the facts have been stipulated and are so found.

The stipulations of fact and attached exhibits are incorporated

herein by this reference.   Petitioners resided in McLoud,

Oklahoma, on the date the petition was filed in this case.

Hereinafter, references to petitioner in the singular are to

James Walker.

     Petitioner is an attorney who specializes in lobbying

activities.   During 1990 and 1991, he represented business

clients involved in banking, savings and loans, dentistry,

insurance, and the cable and trucking industries.   During 1990

and 1991, petitioner traveled to Washington, D.C. to lobby on

behalf of his cable, trucking and savings and loan clients, and

regularly attended Oklahoma legislature meetings as a lobbyist.

Petitioner was reimbursed by his law firm, a professional

corporation, for business expenses including travel, meals, and

entertainment which petitioner incurred in the performance of his

lobbyist activities.   The law firm, in turn, was reimbursed for

these expenses by the clients the firm represented.
                               - 3 -

     Petitioner, however, was not reimbursed by his law firm or

its corporate clients for his personal political contributions.

The corporations that petitioner's law firm represented were

prohibited by Oklahoma and Federal campaign finance laws from

making direct or indirect contributions for the election or

reelection of candidates for public office.

     Petitioner, individually, made political contributions in

1990 and 1991 in the amounts of $9,250 and $6,582, respectively,

in support of political candidates running for election or

reelection in the Oklahoma legislature or the United States

Congress.   The individual contributions usually ranged in amounts

from $50 to $200.   On their 1990 Federal income tax return,

petitioners claimed a deduction for these political contributions

as a Schedule C lobbying expense.    The 1991 contributions were

claimed as Schedule A unreimbursed employee business expense

deductions.   Respondent disallowed all of the claimed deductions.

     Respondent's determinations are presumed to be correct and

petitioners bear the burden of proving otherwise.     Rule 142(a);

Welch v. Helvering, 290 U.S. 111, 115 (1933).

     Section 162(a) allows the deduction of all ordinary and

necessary expenses paid or incurred during the taxable year in

carrying on any trade or business.     Deductions are strictly a

matter of legislative grace, and petitioners bear the burden of

proving their entitlement to any deduction claimed.     Rule 142(a);
                                - 4 -

INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992); New

Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934).

     Section 162(e)(1) provides that the deduction allowed by

section 162(a) shall include all the ordinary and necessary

expenses paid or incurred in carrying on a trade or business in

direct connection with appearances before or communications with

legislative bodies with respect to legislation or proposed

legislation related to a taxpayer's business.    Cloud v.

Commissioner, 97 T.C. 613, 624 (1991).    Section 162(e)(2),

however, does not allow any deduction under section 162(a) for

any amount paid or incurred by way of contribution, gift, or

otherwise which would be used in any political campaign on behalf

of any candidate for public office, regardless of business

purpose.   Id. at 625.

     Petitioners argue that we should apply section 162(e) as

amended by the Omnibus Budget Reconciliation Act of 1993, Pub. L.

103-66, sec. 13222, 107 Stat. 312, 477.   In particular,

petitioners argue that the current section 162(e)(5)(A) provides

that professional lobbyists, i.e., individuals who are in the

trade or business of lobbying, may deduct political contributions

under section 162(a).    We need not address petitioners' argument

regarding the current section 162(e)(5)(A), since Congress

expressly provided that the section was to be effective only for

amounts paid or incurred after December 31, 1993.
                                 - 5 -

     Section 162(e)(2), in effect for the taxable years in issue,

disallows any deduction under section 162(a) for political

contributions such as the ones that petitioners claimed.      Cloud

v. Commissioner, supra at 625.    Accordingly, respondent's

determination is sustained.

     To reflect the foregoing,

                                          Decision will be entered

                                          for respondent.
