- 75 -
Asheville, North Carolina, and Enid, Oklahoma. NITCO had no
interest in Dial One Mobile. According to the application that
Dial One USA filed with the IURC to sell long-distance services,
NITCO had no interest in Dial One USA. The Postal Service
investigation matter involved a seizure of NICATV's records from
NICATV's business offices. Accordingly, the legal expenses that
NITCO incurred in the RSA #1, Dial One Mobile, Dial One USA,
Sprint contract, and Postal Service investigation matters are not
deductible under section 162. United States v. Gilmore, supra;
Kornhauser v. United States, supra.
Finally, petitioners have failed to establish that the legal
expenses incurred in certain other unknown matters or proceedings
arose in connection with or were proximately related to a
business activity of NITCO. Therefore, the legal expenses that
NITCO incurred in these unknown matters or proceedings are not
deductible under section 162. United States v. Gilmore, supra;
Kornhauser v. United States, supra.
In conclusion, with respect to the legal expenses for which
NITCO claimed 1987, 1988, and 1989 business deductions, we hold
that only those legal expenses that respondent has conceded are
deductible by NITCO under section 162.
III. Constructive Dividend Income
In the notice of deficiency issued to Mr. and Mrs. Mussman,
respondent determined that certain payments made by NITCO
represented constructive dividend income to Mr. Mussman for 1988
Page: Previous 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 NextLast modified: May 25, 2011