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Commissioner, 512 F.2d 882, 886 (9th Cir. 1975), affg. T.C. Memo.
1972-133.
Legal Expense
Petitioner argues that legal expenses incurred to
investigate the possibility of a personal injury claim against
the CHP are deductible business expenses because the accident
giving rise to the possible personal injury claim occurred while
petitioner was engaged in business activities. Respondent
asserts that the legal expenses are personal in nature and not
deductible pursuant to section 262. We agree with respondent.
This case is indistinguishable from our decision in Murphy
v. Commissioner, 48 T.C. 569, 570 (1967), in which we said:
Congress has seen fit to regard an individual as
having two personalities: one as a seeker of profit
who can deduct the expenses incurred in that search,
the other as a creature satisfying his needs as a human
and those of his family but who cannot deduct the
expenditures incurred in such satisfaction.
See United States v. Gilmore, 372 U.S. 39, 44 (1963). Petitioner
possessed both personalities at the time of his accident. While
it is true that petitioner was a profit seeker at the time of the
accident, the damages that petitioner sought were not "profits"
in the sense of compensation for his business efforts. Murphy v.
Commissioner, supra at 570. Rather, as payments solely for
personal injuries, the damages petitioner sought were designed to
indemnify him for bodily impairment that he suffered. Id.
Because the legal expenses were not incurred in the carrying on
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