- 7 - expense incurred by petitioner in closing his business. It has long been established that the cost of dissolution and termination of a business constitutes "an everyday happening in the business world, and in this sense it is quite an ordinary affair under the test of the Welch case [Welch v. Helvering, 290 U.S. 111 (1933), defining what constitutes an "ordinary" and "necessary" business expense]" and is therefore deductible when "directly connected with, or, as otherwise stated * * * proximately resulted from the taxpayer's business." Pacific Coast Biscuit Co. v. Commissioner, 32 B.T.A. 39, 43 (1935). There is no dispute that petitioner ceased to operate his business and that he retired from the practice of law in 1993. There is also no dispute that the expenditure was directly connected with petitioner's business, nor that the cost was necessary in the course of petitioner's business. Under the facts of this case, as an attorney ceasing to practice law, it was also "ordinary" for petitioner to purchase nonpracticing malpractice insurance upon ceasing to practice law. Welch v. Helvering, 290 U.S. 111, 113-115 (1933). Thus, if the Policy is not a capital asset, petitioners would be entitled to deduct its cost as an ordinary and necessary closing expense in 1993.Page: Previous 1 2 3 4 5 6 7 8 Next
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