Jean W. Lange and Jeanne P. Lange - Page 10

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               Respondent argues that the deductibility of the legal fees             
          is governed by section 263.  Section 263 disallows deductions for           
          capital expenditures.  Legal expenses paid to defend or perfect             
          title to property are capital expenditures and are not currently            
          deductible.  Woodward v. Commissioner, 397 U.S. 572, 575-576                
          (1970); Boagni v. Commissioner, 59 T.C. 708, 711-712 (1973).                
               We must look to the origin of the claim to decide whether              
          the legal fees paid by petitioner are currently deductible.                 
          Woodward v. Commissioner, supra at 577-578.  The origin-of-the-             
          claim test requires us to examine the "origin" and "character" of           
          the legal claim rather than the taxpayer's subjective purpose in            
          filing the lawsuit.  Id.; United States v. Gilmore, 372 U.S. 39,            
          49 (1963).  In Gilmore the Supreme Court said:                              
               the origin and character of the claim with respect to                  
               which an expense was incurred, rather than its                         
               potential consequences upon the fortunes of the                        
               taxpayer, is the controlling basic test of whether the                 
               expense was "business" or "personal" and hence whether                 
               it is deductible or not * * * [United States v.                        
               Gilmore, supra at 49].                                                 
          The origin of the claim is identified by analyzing all of the               
          facts and circumstances surrounding the litigation.  Id. at 47-             
          48.  If the origin of the claim involves the defense or                     
          protection of title to property, the legal fees are nondeductible           
          capital expenditures.  Brown v. United States, 526 F.2d 135, 138-           
          139 (6th Cir. 1975); Boagni v. Commissioner, supra at 713.  The             

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