William J. Fleischaker and Donni L. Fleischaker - Page 19




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          identified as "William J. Fleischaker, M.D." for which the                   
          principal business was the provision of medical services.  The               
          other business was identified as "Deborah Fleischaker, et. al"               
          for which the principal business was oil and gas production.  On             
          the Schedules C for oil and gas production activity, petitioners             
          claimed legal and professional expenses of $439,871 for 1991 and             
          $51,950 for 1992.  None of the claimed legal and professional                
          expenses were related to the oil and gas production activity.                
          Except for $11,149 of the fees claimed in 1992, the fees claimed             
          as legal and professional fees from oil and gas production were              
          for payments made by petitioner under his guaranty obligations               
          for Adult Living Center debts and legal fees incurred in                     
          defending against those obligations.  The remaining $11,149                  
          claimed in 1992 was related to petitioner's medical services                 
          activity.                                                                    
               In the notice of deficiency, respondent disallowed a                    
          deduction for all $439,871 of legal fees claimed on the 1991                 
          return and $40,801 of the fees claimed in 1992.  Respondent did              
          not disallow the $11,149 of fees claimed as a deduction related              
          to gas and oil production in 1992 that were related to                       
          petitioner's medical services activity.                                      











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