113 T.C. No. 18
UNITED STATES TAX COURT
MERLIN A. AND DEE D. STEGER, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 19824-98. Filed October 1, 1999.
P, a lawyer, retired from the practice
of law in 1993. That year, P purchased a
nonpracticing malpractice insurance policy
(the Policy) to cover him for an indefinite
period of time for acts, errors, or omissions
in professional services rendered before the
date of P's retirement. Ps claimed a
Schedule C deduction for the entire cost of
the Policy on their 1993 return. R
determined that the Policy is a capital asset
providing a substantial future benefit and
that Ps were only entitled to deduct 10
percent of the cost of the Policy in 1993.
Held: Ps are entitled to deduct the entire
cost of the Policy in the year of termination
of P's business.
James R. Monroe, for petitioners.
George W. Bezold and Christa A. Gruber, for respondent.
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