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Held, further, because the payment of legal fees
primarily benefited H, it is a constructive dividend to
H and not deductible by HIF. To the extent Jack’s
Maintenance Contractors, Inc. v. Commissioner, T.C.
Memo. 1981-349, is inconsistent with this holding, it
is not followed.
Held, further, because the legal fees were Mr.
Hood’s obligation, HIF may not deduct the expenses of
another; Lohrke v. Commissioner, 48 T.C. 679 (1967),
distinguished. To the extent Jack’s Maintenance
Contractors, Inc. v. Commissioner, supra, is
inconsistent with this holding, it is not followed.
Philip L. Kellogg, for petitioners.
Alan R. Peregoy, for respondent.
GALE, Judge: These cases were consolidated for trial,
briefing, and opinion. Respondent determined the following
deficiencies and accuracy-related penalties for petitioners
Lenward C. and Barbara P. Hood’s 1991 (calendar) taxable year and
for petitioner Hood’s Institutional Foods, Inc.’s, taxable year
ended June 30, 1991:
Sec. 6662(a)
Petitioner Deficiency Penalty
Lenward C. & Barbara P. Hood $4,385 $877
Hood’s Institutional Foods, Inc. 41,196 8,239
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years in issue, and
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