42- -
Respondent does not question that Washington County,
Mississippi, was officially determined a disaster area to which
section 165(i) applies because of the floods which occurred in
February and April of 1991. However, it is asserted that
petitioners did not timely elect under section 165(i) for that
provision to apply to the 1991 floods.
The due date for filing petitioners' 1991 return (determined
without regard to any extension of time for filing the return)
was April 15, 1992. The due date for filing their 1990 return
(determined with regard to any extension of time for filing the
return) was April 15, 1991. The later of these two dates is
April 15, 1992. Because petitioners did not attempt to elect
section 165(i) treatment until October 1995, the date of the
trial of this case, petitioners did not make a timely election.
Therefore, section 165(i) does not apply to treat the floods
which occurred in 1991 as having occurred in 1990.
II. Issue 7. Claimed Deductions for Legal and Professional
Expenses
Section 162(a) allows a deduction for all ordinary and
necessary expenses paid or incurred during the taxable year in
carrying on any trade or business. Legal expenses are deductible
under section 162(a) as ordinary and necessary business expenses
if the litigation is directly connected with, or proximately
related to, the taxpayer's business. Bingham Trust v.
Commissioner, 325 U.S. 365, 373-374 (1945); Rafter v.
Commissioner, 60 T.C. 1, 8 (1973), affd. without published
Page: Previous 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 NextLast modified: May 25, 2011