- 7 - from the marital relationship rather than the spouse's activities in holding such income-producing property. In United States v. Gilmore, 372 U.S. 39, 49 (1963), the Supreme Court indicated that-- the origin and character of the claim with respect to which an expense was incurred, rather than its potential consequences upon the fortunes of the taxpayer, is the controlling basic test of whether the expense was "business" or "personal" and hence whether it is deductible or not under * * * [the predecessor to section 212]. * * * See also United States v. Patrick, 372 U.S. 53, 56 (1963). Even if the legal fees were incurred to protect the ownership of petitioner's home, and, consequently, the home office, petitioner has failed to show that the fees are deductible as expenses of a profit-seeking activity. In United States v. Gilmore, supra at 48, the Supreme Court stated-- If two taxpayers are each sued for an automobile accident while driving for pleasure, deductibility of their litigation costs would turn on the mere circumstance of the character of the assets each happened to possess, that is, whether the judgments against them stood to be satisfied out of income- or nonincome-producing property. We should be slow to attribute to Congress a purpose producing such unequal treatment among taxpayers, resting on no rational foundation. Petitioner has not demonstrated that the legal expenses incurred in the criminal action are related to his trade or business or to any other income-producing activity conducted by him. Commissioner v. Tellier, 383 U.S. 687, 689 (1966). Therefore,Page: Previous 1 2 3 4 5 6 7 8 9 Next
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