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that business. Furthermore, a loss was involved, a point which
the Court emphasized by observing that the expenses reduced the
amount of the loss and consequently the deduction. Indeed, the
Court suggested that a gain might involve different treatment.
See Ticket Office Equipment Co. v. Commissioner, 20 T.C. at 280
n.6. Finally, it is not without significance that Ticket Office
Equipment long antedated the articulation by the Supreme Court of
the "origin of the claim" doctrine, see supra p. 5. Thus, Ticket
Office Equipment is clearly distinguishable, as is United States
v. Pate, 254 F.2d 480 (10th Cir. 1958), which also involved
business property.
We hold that the legal expenses represent capital
expenditures nondeductible under section 263 and an offset
against the gain represented by the insurance proceeds, none of
which petitioners recognized in the taxable year before us.
Decision will be entered
for respondent.
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