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Respondent devotes much time in his opening brief to his
proffered method of apportioning petitioner's legal costs between
his business and nonbusiness activities, spending little time
arguing that apportionment of the legal costs is appropriate. As
we understand respondent's argument on apportionment, petitioner
must apportion his legal costs because, respondent asserts,
petitioner has not proven that he incurred 100 percent of the
costs in his insurance business. We disagree. After reviewing
the record, which includes 19 stipulations and 9 exhibits, we are
persuaded by more than a preponderance of the evidence that all
of petitioner's legal costs were attributable to his insurance
business and, more importantly, that all of the costs were
connected to claims which arose in that business. Petitioner's
complaint, for example, attests to the fact that each of his
claims, and not simply his claim of conversion, arose from the
sole-proprietor insurance business.
We consider it both ordinary and necessary from a business
standpoint for petitioner to have filed the lawsuit against
Academy and for him to have sought any and all damages to which
he was entitled on account of Academy's breach of contract and
related conversion. The mere fact that petitioner sought and was
paid punitive damages to punish Academy for its "extraordinary
misconduct, and to serve as a warning [to it and to other
persons] not to engage in such conduct in the future" does not
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