Jean W. Lange and Jeanne P. Lange - Page 11

                                       - 11 -                                         

          question to be answered is, out of what kind of transaction did             
          the litigation arise.  Boagni v. Commissioner, supra.                       
               The facts surrounding the litigation between petitioner and            
          Elmer's heirs are not in dispute.  After his brother died,                  
          petitioner took various steps to protect his ownership of Madison           
          stock and to acquire additional shares of such stock.  Elmer's              
          family resisted petitioner's efforts and filed suit against                 
          petitioner and his son.  Petitioner counterclaimed, seeking a               
          declaration that the attempted redemption from Elmer's estate and           
          issuance of stock to petitioner were valid and seeking an order             
          for specific performance of the agreement to sell 600 shares.               
               Petitioner argues that he undertook the litigation to                  
          protect his position at the Bank.  Petitioner points to several             
          of respondent's revenue rulings holding that litigation expenses            
          incurred to defend a taxpayer's actions as an employee are                  
          deductible as ordinary and necessary expenses incurred in the               
          conduct of a trade or business.  See Rev. Rul. 74-394, 1974-2               
          C.B. 40; Rev. Rul. 71-470, 1971-2 C.B. 121.  Petitioner contends            
          the origin of the claim was the heirs' attempt to remove                    
          petitioner from his job at the Bank.  Because petitioner filed              
          his claims in part to protect his employment at the Bank,                   
          petitioner reasons that the legal fees he incurred are currently            
          deductible.  We disagree.                                                   

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  Next

Last modified: May 25, 2011