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(k) Expenses paid or incurred in defending or
perfecting title to property, in recovering property
(other than investment property and amounts of income
which, if and when recovered, must be included in gross
income), or in developing or improving property,
constitute a part of the cost of the property and are
not deductible expenses. * * * Expenses paid or
incurred in protecting or asserting one's rights to
property of a decedent as heir or legatee, or as
beneficiary under a testamentary trust, are not
deductible.
Petitioner contends that respondent mischaracterizes the
professional fees incurred to defend Garland's lawsuit as costs
to defend title to Trust property and/or to protect rights to
property within the meaning of section 1.212-1(k), Income Tax
Regs., because, according to petitioner, none of the claims for
relief involved the acquisition or defense of title to property.
Petitioner cites Estate of Kincaid v. Commissioner, T.C. Memo.
1986-543, in support of her contention that, where the origin of
the claim was the prevention of conduct which would be
detrimental to her interest as income beneficiary, the litigation
costs are deductible. Petitioner argues that, just like the
taxpayer in Estate of Kincaid, she defended the lawsuit in her
capacity as income beneficiary to prevent impairment of the
production and collection of income from Trust assets.
Petitioner misapplies our decision in Estate of Kincaid v.
Commissioner, supra. In Estate of Kincaid, the taxpayer's
husband established a trust for which a bank was trustee. Under
the terms of the trust agreement, the bank was required to pay
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