Harry D. Bledsoe and Annie L. Bledsoe - Page 11

                                                - 11 -                                                  

                  Petitioner's litigation began in 1979 when he sought a                                
            divorce from his former wife, Ms. Bledsoe.  This litigation                                 
            required the division of extensive property that had been                                   
            acquired during their marriage.  After the divorce was granted in                           
            1981, Ms. Bledsoe appealed the decision, claiming that the court                            
            abused its discretion regarding the property division.  The                                 
            divorce decree was affirmed.                                                                
                  In 1983, Resthaven sued Ms. Bledsoe for $14,250 plus                                  
            interest for the balance due on the note that she had assumed.                              
            Resthaven's claim was based in large part on the divorce decree.                            
            Ms. Bledsoe counterclaimed and argued that petitioner and                                   
            Resthaven had failed to fulfill their obligations to her under                              
            the divorce decree.  In 1985, Ms. Bledsoe confessed judgment on                             
            the note and mortgage, and in 1989, this litigation ended.                                  
                  Section 162 provides taxpayers with deductions for all                                
            "ordinary and necessary expenses paid or incurred during the                                
            taxable year in carrying on any trade or business".  Section 212                            
            allows deductions for all                                                                   
                  ordinary and necessary expenses paid or incurred during                               
                  the taxable year--                                                                    
                        (1) for the production or collection of income;                                 
                        (2) for the management, conservation, or maintenance of                         
                  property held for the production of income * * *                                      

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Last modified: May 25, 2011