Reina Martinez - Page 7

                                        - 7 -                                         
               Accordingly, we conclude that petitioner is not entitled to            
          exclude any part of the $653,230 recovery under section                     
               Petitioner also contends that she is entitled to exclude the           
          portion (i.e., $163,308) of the settlement used to pay legal                
          fees.  Respondent contends that the legal fees are deductible               
          under section 212(1) as an expense for the production of income             
          and treated as a miscellaneous itemized deduction under section             
          67.  We agree with respondent that the legal fees are deductible            
          to the extent they exceed 2 percent of petitioner's adjusted                
          gross income.  See Alexander v. Commissioner, 72 F.3d 938, 946              
          (1st Cir. 1995), affg. T.C. Memo. 1995-51; see also sec. 1.67-              
          1T(a)(1)(ii), Temporary Income Tax Regs., 53 Fed. Reg. 9875 (Mar.           
          28, 1988).                                                                  
               We have considered all other arguments made by the parties             
          and found them to be either irrelevant or without merit.                    
               To reflect the foregoing,                                              

                                                  Decision will be entered            
                                             under Rule 155.                          

Page:  Previous  1  2  3  4  5  6  7  

Last modified: May 25, 2011