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For the year 1976 petitioner claimed a deduction for legal
and professional fees in the amount of $19,799.12 paid to
architect J. Foley. This amount comprises $4,779.12 paid with
respect to a housing project for General Dynamics and $15,000
paid with respect to the purchase and construction of the
building on Riverside Drive which housed CTC's operations. The
amount paid pertaining to the housing project for General
Dynamics employees is not an ordinary and necessary business
expense of petitioner. For the years at issue, he reported no
income from General Dynamics. Thus, any fees paid for services
rendered by Mr. Foley to General Dynamics would be a business
expense of General Dynamics, not petitioner. Furthermore, these
fees are capital in nature. The fees paid for the services
rendered with respect to the purchase and construction of CTC's
office building are clearly capital expenditures and not current
deductions. Sec. 263(a).
Petitioner deducted $2,425.20 as a professional fee paid to
Price Waterhouse for its services rendered as resident agent of
WHIP, a Bahamian corporation. Because WHIP was a shell
corporation, this payment was petitioner's ordinary and necessary
business expense. Hence, the deduction is allowed.
On his 1978 income tax return, petitioner deducted payments
totaling $5,000 made to Sandra Rossi and Celia Longenbaker.
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