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actual damages. R asserts that the remaining legal
costs are a nonbusiness itemized deduction because they
are attributable to P's recovery of the punitive
damages. P and R agree that the punitive damages are
includable in P's business income if the legal costs
are a business expense.
Held: All of the legal costs are attributable to
P's trade or business; hence, the legal costs are all
deductible on Schedule C as a business expense.
Bobby Wayne Enlow, for petitioner.
Jeanne Gramling, for respondent.
OPINION
LARO, Judge: This case is before the Court fully
stipulated. See Rule 122. George W. Guill petitioned the Court
to redetermine deficiencies of $100,916 and $434 in his 1992 and
1993 Federal income tax, respectively. Following the parties'
concessions, the primary issue left to decide is whether all of
the attorney's fees and court costs (collectively, legal costs)
paid by petitioner in the successful prosecution of his claim of
conversion are expenses of his sole-proprietor business;
petitioner was awarded actual damages, punitive damages, costs,
and interest. We hold they are. Section references are to the
Internal Revenue Code in effect for 1992. Rule references are to
the Tax Court Rules of Practice and Procedure. Dollar amounts
are rounded to the nearest dollar.
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