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litigation expenses incurred in connection with the performance
of her duties of administration within the meaning of section
1.212-1(i), Income Tax Regs. Respondent contends that the
disallowed professional fees represent capital expenditures
within the meaning of section 263, because the fees were incurred
to defend the validity of the Trust and its title to Trust
property. We agree with respondent.
Whether professional fees incurred in connection with
litigation are deductible expenses under section 212, or are
capital expenditures under section 263, requires an examination
of the origin of the claims giving rise to the professional fees.
See United States v. Gilmore, supra at 49 ("the origin and
character of the claim with respect to which an expense was
incurred, rather than its potential consequences upon the
fortunes of the taxpayer, is the controlling basic test of
whether the expense was 'business' or 'personal'"); Boagni v.
Commissioner, supra at 712-713.
This Court has applied the origin-of-the-claim test to
evaluate the deductibility of litigation expenses under both
section 162 and section 212 and has extended the origin-of-the-
claim test to cases involving the defense or perfection of title
to property. See Boagni v. Commissioner, supra at 713 (citing
Reed v. Commissioner, 55 T.C. 32, 39-41 (1970)); see also sec.
1.212-1(k), Income Tax Regs., which provides in pertinent part:
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Last modified: May 25, 2011