17
A. Ordinary
Ordinary expenses have been described as "normal, usual, or
customary". Deputy v. du Pont, 308 U.S. at 495. Ordinary has
been used to distinguish currently deductible expenses from
capital expenses, such as startup costs or acquisition costs, or
costs in defending title. Commissioner v. Lincoln Sav. & Loan
Association, 403 U.S. 345 (1971); Woodward v. Commissioner, 397
U.S. 572 (1970); Carl Reimers Co. v. Commissioner, 211 F.2d 66
(2d Cir. 1954), affg. 19 T.C. 1235 (1953). An expense may be
deductible as one incurred in the ordinary course of business,
even if it is unlikely to recur. Welch v. Helvering, 289 U.S.
111, 114 (1933). The Supreme Court in Commissioner v. Heininger,
320 U.S. 467, 471 (1943), allowed a deduction for legal fees
where obtaining legal representation was the normal response of
one whose business was threatened by a law suit. See also
Kanelos v. Commissioner, a Memorandum Opinion of this Court dated
Sept. 21, 1943.
Respondent argues that the origin of the claim giving rise
to the legal expenses here in issue was capital in nature because
the claim involved the sale of a capital asset (namely, the ERG
stock), and because Peters undertook to defend against the claim
in order to prevent disgorgement of proceeds of insider trading.
Respondent contends that under Barrett v. Commissioner, 96 T.C.
713 (1991), such legal fees are not currently deductible.
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