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receives contingent compensation in the form of a percentage of income for his
services rendered to the other party.
Based on the record, we find that there is nothing to indicate that the
parties intended the contingency fee arrangement to be a joint venture or
partnership. Mr. Rawlings testified that he regarded the agreement between
himself and petitioner as nothing more than an arrangement for the payment for
his services. Petitioner did not testify with respect to the fee agreement.
There is, therefore, no testimony whatsoever that either party intended to
form a partnership. Petitioner did not report any profit or loss from any
partnership with Mr. Rawlings, but instead claimed a miscellaneous itemized
deduction for attorney's fees paid. We, therefore, find petitioner's argument
to be without merit.
Petitioner also argues that the $50-per-hour portion of the legal fees
he paid is deductible as a Schedule C expense under section 162, since
petitioner was "defending his professional name and attempting to protect his
occupation as a consultant to the meat packing industry." There is no
Schedule C attached to petitioner's 1987 return. There is attached a Form
2106, Employee Business Expenses. Petitioner has made no showing of any
connection of the IBP litigation with a consulting business, if any, in which
he was engaged in 1987 or any other year. Therefore, to the extent the IBP
litigation costs are deductible, they are deductible either as employee
business expenses or expenses incurred for the production of income. A
deduction for either such expense is a miscellaneous itemized deduction,
allowable only to the extent that the total of such deductions exceeds 2
percent of adjusted gross income. See McKay v. Commissioner, 102 T.C. 465,
493 (1994).
Petitioner contends that the statutorily-imposed interest received on
the amount of the judgment he received on account of the personal injury he
suffered, should be excludable from income. This issue has been before us on
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