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these circumstances we do not need to determine which side’s
stated view of the facts is more likely to be correct.
We hold for petitioner on this issue.11
(2B) Attorney’s Fees--Zerbini
Respondent notes that petitioner paid $3,000 to Zerbini on
August 13, 1986, for Zerbini’s representation in the already-
unfolding criminal case. Relying on petitioner’s admission in a
trial memorandum and the Wichita Terminal Elevator Co. doctrine,
respondent contends that part of this payment was for Zerbini’s
representation of Zeve in the criminal case. Respondent asserts
that “petitioner’s payment of legal fees on behalf of its
individual members and officers acting in their private capacity
constitutes private inurement.”
On brief, petitioner acknowledges that “Zerbini did provide
some legal advice to Zeve in conjunction with the proceedings
against Petitioner,” but contends that “Petitioner did not pay
Zerbini for any legal advice given to Zeve.” Petitioner points
out that “No criminal proceedings were ever instituted against
* * * Zeve.” Petitioner contends that the payment to Zerbini was
merely one of the “Ordinary and necessary expenses made in
11 We do not make any determination or state any
conclusion in the instant opinion as to how Climaco’s joint
representation of petitioner, Zeve, and Popovic in the 1987 civil
proceeding might affect petitioner’s tax status for years after
the last of the years in issue in the instant case.
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