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After concessions, the issues for decision are whether
petitioners' expenditures for legal services, which respondent
agrees are deductible pursuant to section 212, are subject to
section 67(a), and alternatively whether such expenditures are
capital expenditures. We hold that petitioners' section 212
deduction is subject to section 67(a) and that their expenditures
are not capital expenditures.
FINDINGS OF FACT
The parties submitted this case fully stipulated pursuant to
Rule 122. At the time Jeffrey and Mary Glassman filed their
petition, they resided in Lake Forest, California.
In 1954, Mary Glassman married James M. Oddino. During
their marriage, Mr. Oddino was employed by the Hughes Aircraft
Company and participated in the Hughes Non-Bargaining Retirement
Plan (Hughes Plan). On January 19, 1983, the Superior Court of
the State of California, County of Los Angeles (Superior Court),
issued an interlocutory judgment that dissolved the marriage and
awarded Mrs. Glassman a portion of Mr. Oddino's retirement
benefits. On March 24, 1989, the Superior Court issued a
Qualified Domestic Relations Order (QDRO) that modified and
clarified the interlocutory judgment. The QDRO directed the
Hughes Plan to: (1) Pay Mrs. Glassman 36.6231 percent of Mr.
Oddino's "accrued benefit[s] as of April 1, 1988"; (2) convert
Mrs. Glassman's payout option from a lifetime annuity to an
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