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Two days after petitioner filed for bankruptcy, Mr. Cotter
filed a lawsuit in the United States Bankruptcy Court against
petitioner based on multiple causes of action relating to the
equipment leasing activity of Cilena and the partnership affairs
of Aeternum. As a result, petitioner was forced to defend
against such causes of action in order to protect his interests
in Aeternum and Cilena. A lawsuit “ordinarily and, as a general
thing at least, necessarily requires the employment of counsel
and payment of his charges.” Kornhauser v. United States, supra
at 152. Petitioner incurred legal expenses as a result of Mr.
Cotter’s lawsuit, which arose directly out of the business
affairs of Cilena and Aeternum. These expenses are deductible
under section 162.
Having established that petitioner is entitled to the legal
expenses incurred in his bankruptcy and the defense of Mr.
Cotter’s lawsuit, we must decide whether petitioner has
sufficiently substantiated the claimed deduction.
The legal expenses in issue consist of: (1) Payment to Dr.
West in the amount of $13,749 for anticipated legal and travel
expenses; (2) payment to George Bozzo in the amount of $500
relating to the business affairs of Cilena and Aeternum; (3)
payment to Sunnyvale Bar Association in the amount of $30 for
referral to a bankruptcy attorney; (4) payment to Larry Hughes in
the amount of $4,350 for legal work relating to petitioner’s
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