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We must decide whether any of the claimed legal expenses which
petitioners deducted were attributable to Resthaven's cemetery
business and, therefore, deductible under either section 162 or
212.
In United States v. Gilmore, 372 U.S. 39, 49 (1963), the
Supreme Court held that the proper time for characterizing an
expense as either "business" or "personal" is when the expense is
incurred. The U.S. Court of Appeals for the Tenth Circuit, based
on the Supreme Court's holding, formulated the "origin of the
claim" test. That test must be separately applied to the divided
parts: the divorce action and the action in which the
corporation was a party. Dolese v. United States, 605 F.2d 1146,
1151 (10th Cir. 1979). Hence, we must decide the origin of the
expenditures as they apply to petitioners and to Resthaven.
Wallace v. Commissioner, 56 T.C. 624, 632 (1971).
This Court has held that, when appropriate, litigation
expenses should be allocated between personal and business costs.
Michaels v. Commissioner, 12 T.C. 17 (1949). "Such an allocation
between deductible and non-deductible expenses is not unusual, *
* * although 'a rough approximation is all that can be
expected.'" Burch v. United States, 698 F.2d 575, 579-580 (2d
Cir. 1983) (quoting Ditmars v. Commissioner, 302 F.2d 481, 488
(2d Cir. 1962), revg. and remanding T.C. Memo. 1961-105).
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