- 9 -
court properly voided both petitioner's attempt to have Madison
redeem the stock from Elmer's estate and his attempt to have
Madison issue 2,000 shares of common stock to himself.3
Petitioner and his wife filed joint income tax returns for
1992, 1993, and 1994. In these returns, they claimed deductions
for legal fees in the amounts of $150,877, $50,737, and $30,040,
respectively. All of the legal fees related to the above litiga-
tion. Respondent determined that petitioner and his wife were
not entitled to current deductions for the legal fees that they
incurred.
OPINION
We must decide whether the legal fees paid by petitioner
were deductible during the years at issue. Petitioner argues
that the fees were properly deducted pursuant to section 162 or
section 212. Section 162 allows a deduction for all "ordinary
and necessary expenses paid or incurred during the taxable year
in carrying on any trade or business". Sec. 162(a). Section 212
allows a deduction for all "ordinary and necessary expenses paid
or incurred during the taxable year--(1) for the production or
collection of income". Sec. 212(1). Petitioner bears the burden
of proving that he satisfies the requirements under section 162
or section 212. Rule 142(a); Welch v. Helvering, 290 U.S. 111,
115 (1933).
3See Lange v. Lange, 520 N.W.2d 113 (Iowa 1994).
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
Last modified: May 25, 2011