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specific performance. Id. at 62. The taxpayer paid roughly
$57,000 to settle the litigation. Id. at 61.
The Fifth Circuit determined that the origin of the proposed
deduction was the suit for specific performance, which revolved
around the title to the stock. Id. at 63. The court concluded
that the settlement payments the taxpayer made were capital
expenditures. Id. at 64; see Von Hafften v. Commissioner, 76
T.C. 831 (1981).
The origin of the claim in the present case was the dispute
over title to 24.5 percent of petitioner's stock. Mark Goldman
agreed to use his best efforts to cause petitioner to become a
New York Stamp Tax Agent. In exchange, he was granted an option
to purchase 24.5 percent of petitioner's stock. Petitioner
acquired a Stamp Tax Agent license in September 1989. In a
timely manner, Mark Goldman gave notice that he intended to
exercise his option. His request was rejected.
In response, Goldman filed suit in the Supreme Court of the
State of New York. In his verified complaint, he alleged:
13. Plaintiff Goldman is ready, willing and able to tender
the purchase price for the common shares of stock as set
forth in the Option Agreement pursuant to paragraph 6
thereof.
14. The shares of stock in the Company are unique in that
they represent an interest in a Company possessing a New
York Stamp Tax Agents [sic] License.
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