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purchased stock through Mr. Castoe on one or two occasions.
Petitioner has failed to show how the payments made to or on
behalf of Mr. Castoe constitute his ordinary and necessary
business expense. He has not shown how Mr. Castoe's activities
relate to his trade or business of representing U.S.
manufacturers selling machinery or developing real estate.
Commissions paid to a stockbroker are taken into account in
computing the gain or loss on the sale of stock. Such amounts
are not ordinary and necessary business expenses because the
expenses of an investor are not trade or business expenses.
Higgins v. Commissioner, 312 U.S. 212 (1941). In addition,
petitioner has not established a relationship between the
payments made to or on behalf of Mr. Castoe and any investments
he may have made through Mr. Castoe. For these reasons, we
sustain respondent's determination.
For the years 1978 and 1979 petitioner deducted fees paid to
his brother, I.J. Zand, in the amounts of $100,000 and $50,000,
respectively. Petitioner maintains that these payments are
deductible due to a fee splitting arrangement he had with his
brother concerning an agreement petitioner had with Harris
Corporation. Petitioner substantiated the payment to I.J. Zand
in the amount of $100,000 for the year 1978, and respondent
concedes that amount. However, petitioner has failed to
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