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1995-51, respondent contends that petitioners may deduct
attorney's fees in the amount of $41,395 only as a miscellaneous
itemized deduction.
We agree with respondent. In Alexander, the Court of
Appeals stated that the former employer's "direct and joint
payment is 'standard operating procedure' in all types of
litigation" and that both the former employer and the taxpayer
were responsible for their respective legal costs, id. at 946,
and limited the taxpayer's deduction to a miscellaneous itemized
deduction. In the instant case, although State Farm issued a
check jointly to petitioner and her attorneys, petitioner was
responsible for her legal costs. The settlement agreement
provided, inter alia, that the State Farm payment included
petitioner's attorney's fees and that it was petitioner's
responsibility to pay her attorney's fees. Accordingly, we
conclude that petitioners are entitled to claim attorney's fees
in the amount of $41,395 as a miscellaneous itemized deduction.
We have considered all of petitioners' remaining arguments
and find them to be without merit.
To reflect the foregoing,
Decision will be entered
under Rule 155.
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Last modified: May 25, 2011