3
(2) Whether petitioners may deduct legal expenses of
$10,243 in 1986, $59,352 in 1987, and $104,156 in 1988. We hold
that they may, subject to the 2-percent limit in section 67.
Unless otherwise indicated, section references are to the
Internal Revenue Code. Rule references are to the Tax Court
Rules of Practice and Procedure.
I. FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
A. Petitioners
Petitioners Stephen F. Scofield (petitioner) and Nancy E.
Scofield (Mrs. Scofield) are married and lived in Marietta,
Georgia, when they filed their petition. Petitioners have been
married since 1981 and have four sons.
Petitioner graduated from Syracuse University in 1968 with a
degree in economics. He started to work in the newsprint
industry that year. He worked for Great Northern Paper Co.
(Great Northern) from 1968 to June 1972, primarily in sales
positions. Petitioner then worked for about 4 years as sales
manager for Eastern Color Printing Co. (ECP), a printing
business.
B. Petitioner's Businesses
1. Unidyne
Petitioner left ECP around 1976 to start a company which he
named Unidyne, Inc. (Unidyne). Unidyne was in the paper
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