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litigation expenses from Orange Co. Therefore, respondent
contends that petitioner is not entitled to deduct the SEC and
Orange Co. litigation expenses.
Assuming arguendo that Mr. Davis was in the "business of
promoting"6--which he alleges entailed the starting and promoting
of businesses--the SEC and Orange Co. litigation did not arise
from, were not proximately related to, and did not bear a nexus
to a "business of promoting". The SEC litigation arose out of
the SEC's investigation of an unusual amount of trading of Orange
Co. stock in August of 1984 by Mr. Binion and Mr. Davis' sons.
The complaint the SEC filed alleged that certain trading by Mr.
Davis' sons was based on material, nonpublic information provided
to them by their father. The Orange Co. litigation arose out of
a hostile proxy fight, an alleged breach of fiduciary duty and
breach of contract by Orange Co.'s former officers and directors,
and the ouster of the directors of Orange Co. The Orange Co.
litigation also involved Mr. Davis' additional breach of contract
and unjust enrichment claims.
Assuming arguendo that the aforementioned claims in the SEC
and Orange Co. litigation were related to his position as an
employee of Orange Co., the performance of services as an
6 We make no finding regarding whether Mr. Davis was in the
"business of promoting".
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