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the particular business are controlling. See Deputy v. DuPont,
308 U.S. 488, 496 (1940). Necessary connotes a sense that the
expense is appropriate and helpful, rather than absolutely
essential. See Welch v. Helvering, supra at 113. Petitioner
maintained the plan as compensation for its employees, and the
plan lost money due to Prudential's alleged misconduct. We are
convinced petitioner's funding of the litigation costs, to the
extent allocable to the plan, was both ordinary and necessary to
petitioner's trade or business. Petitioner has satisfied the
section 162 requirements as to the portion of litigation costs
allocable to the plan set forth below.
Respondent argues erroneously that section 1.404(a)-3(d),
Income Tax Regs., allows deduction only of expenses that are of a
"recurring nature" related to "administration" of the plan.
Citing Rev. Rul. 86-142, 1986-2 C.B. 60, respondent argues the
litigation costs are "non-recurring expenses" and therefore, not
deductible. In that revenue ruling, the issue was whether the
employer could deduct amounts paid into a pension trust by an
employer to reimburse the trustee for broker’s fees paid by the
trust. In holding the broker’s fees were not deductible, the
Commissioner reasoned: "Brokers commissions are not recurring
administrative or overhead expenses, such as trustee or actuary
fees, incurred in connection with the maintenance of the trust or
plan." See Rev. Rul. 86-142, 1986-2 C.B. 61.
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