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and hence his "home office". Petitioner argues that the amounts
paid in 1988 are deductible on his 1989 and 1990 returns because
the case continued into 1989.5 Respondent argues that the
expenses relate to a claim which is personal in nature and,
therefore, are not deductible.
Section 212 provides, in pertinent part, that expenses for
the production of income (i.e., legal expenses) are deductible as
ordinary and necessary business expenses, if the expenses are--
paid or incurred during the taxable year--
(1) for the production or collection of
income;
(2) for the management, conservation, or
maintenance of property held for the
production of income; or
(3) in connection with the
determination, collection, or refund of any
tax.
Section 262(a) provides that, in general, no deduction shall
be allowed for personal, living, or family expenses.
"[A]ttorney's fees and other costs paid in connection with a
divorce, separation, or decree for support, are not deductible by
either the husband or the wife." Sec. 1.262-1(b)(7), Income Tax
Regs. Expenses incurred in connection with a divorce property
settlement are not deductible because such expenses are derived
5 We note that petitioner's proposition that expenses incurred by a cash
basis taxpayer in 1 year are deductible in the next is erroneous. Taxpayers
on a cash basis ordinarily may claim deductions only in the year such expenses
are actually paid. Sec. 1.461-1(a)(1), Income Tax Regs.
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