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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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Last modified: May 25, 2011