George W. Guill - Page 12

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          regardless of an award of damages on any other claim,                        
          petitioner's award of punitive damages could not have been made              
          in isolation.  As South Carolina's highest court has stated:                 
          "Punitive damages may be awarded [under South Carolina law] only             
          upon a finding of actual damages."  Dowling v. Home Buyers                   
          Warranty Corp., 428 S.E.2d 709, 711 (S.C. 1993); see also Gamble             
          v. Stevenson, 406 S.E.2d 350 (S.C. 1991).                                    
               We hold that petitioner may deduct the legal costs under                
          section 162(a).3  In reaching our holdings herein, we have                   
          considered all arguments by the parties, and, to the extent not              
          addressed above, find them to be meritless or irrelevant.  To                
          reflect the foregoing,                                                       
                                                   Decision will be entered            
                                              under Rule 155.                          

          3  The parties agree that our holding on this issue means                    
          that the punitive damage award is includable in petitioner's                 
          self-employment income and that it is subject to self-employment             
          tax.  See secs. 1401 and 1402.                                               

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