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showing that the legal services were performed in 1990.
Consequently, we hold that the attorney's fee was not deductible
in 1990.
Second, petitioners claim that they are entitled to deduct
as a business expense a $6,000 payment made in 1990 in settlement
of a lawsuit against Dr. Oliver. The lawsuit, in which the
plaintiff alleged that Dr. Oliver acted unethically when he
treated a child at his home for injuries the child suffered while
playing with his son, was filed against Dr. Oliver personally and
in his professional capacity as a physician.
Respondent argues that because the $6,000 payment
represented a payment in settlement of litigation and was not a
legal fee, it is not deductible under section 162(a).
Alternatively, respondent argues that the expense was personal in
nature.
It is well established that settlement payments made to
avoid litigation are deductible under section 162(a) as ordinary
and necessary business expenses when they have a business origin.
Anchor Coupling Co. v. United States, 427 F.2d 429, 433 (7th Cir.
1970); Eisler v. Commissioner, 59 T.C. 634 (1973). Here we find
that petitioners are not barred from deducting payments made in
settlement of the litigation.
To determine whether a payment made in settlement of
litigation is directly connected with, or proximately related to,
the taxpayer's business, the controlling criteria are the origin
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