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Rappaport and provided no financing to the venture. Kanter would
not share economically in the exploitation of the painting.
OPINION
Section 162 allows a deduction for all ordinary and
necessary expenses paid or incurred in carrying on a trade or
business. Expenses paid for or on behalf of another are not
deductible. A voluntary assumption of liability is
nondeductible. Polak's Frutal Works, Inc. v. United States, 176
F. Supp. 521 (S.D.N.Y. 1959), affd. 281 F.2d 261 (2d Cir. 1960).
Obligations which do not grow out of a taxpayer's own business
but which are personal in nature are nondeductible. Family
Group, Inc. v. Commissioner, 59 T.C. 660 (1973).
Although Kanter acknowledged that during 1980 he was
practicing law on a full-time basis and was not in the business
of buying and selling art, he contends that he was engaged in the
business of assisting other individuals to locate financing for
investments. He asserts that he "was in the trade or business of
locating financing for investments, whether the investments be in
real estate, securities, or works of art". Thus Kanter argued
that the $104,231 was an ordinary and necessary expense of his
investment financing business and was properly deductible by him.
Alternatively, he contended that, even if the activity was not a
trade or business, a deduction should be allowed under section
212.
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