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and a taxpayer claiming a deduction bears the burden of clearly
showing that the terms of the applicable statute have been
satisfied. INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84
(1992); New Colonial Ice Co. v. Helvering, 292 U.S. 435 (1934).
On this record, we do not believe petitioner has demonstrated
that Lakeview paid $75,000 for rent in 1992, and we accordingly
sustain respondent's determination to disallow this amount.
3. Legal Expenses
a. Background--Origin of the Claim Test
Respondent argues that Lakeview is not entitled to deduct
$93,491 in claimed legal expenses incurred in connection with the
lawsuit brought by William because the lawsuit constituted a
personal dispute between William and petitioner. Thus,
respondent contends, under the "origin of the claim" test of
United States v. Gilmore, 372 U.S. 39 (1963), the legal expenses
were personal to petitioner and may not be deducted by Lakeview.
Alternatively, respondent argues that to the extent any of the
expenses are found not to be personal to petitioner but
attributable to Lakeview, they must be capitalized because "they
are not proximately related to the trade or business conducted by
Lakeview * * * but rather related to the control of the
corporation."
Petitioner likewise employs the "origin of the claim" test,
and argues against capitalization of the legal expenses on the
grounds that they were expended to defend against an attack on
the business, that was "in essence a hostile takeover attempt",
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