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security services of $12,000 and tax expenses of $18,000; (3) for
1994, security services of $12,000 and tax expenses of $2,000.4
With respect to his claimed 1992 and 1993 legal expenses,
petitioner has failed to establish that those expenses were not
capital expenditures. Virtually no evidence was offered
concerning the nature and origin of the claims involved in these
disputes.5 The record contains no pleadings from these disputes.
We are thus unable to determine the origin and character of the
claim or claims that were litigated in those disputes. See Dower
v. United States, supra. Accordingly, we hold that petitioner is
not entitled to deductions under section 162 for his claimed 1992
4We do not consider respondent’s alternative arguments that
petitioner is not entitled to deductions because the Villa del
Mar venture was actually conducted by a separate Brazilian legal
entity, and any deductions petitioner receives are still subject
to a 2-percent floor because, following Villa del Mar’s closing
in 1990, petitioner, at best, only engaged in an investment
activity under sec. 212. This separate legal entity issue is a
new issue which respondent is attempting to raise for the first
time on brief. Similarly, the sec. 212 issue is also a new issue
and was not raised either in the notice of deficiency or in
respondent’s answer.
5In February 1996, Ms. Oliveira issued to petitioner an
itemized statement of 1992 expenses from Villa del Mar. That
statement reflects legal or professional expenses of $65,750 paid
for 1992 as follows:
Expenses for lawyers (including
Court expenses)--
Dr. Guy Agulha $36,000
Dr. Themir Batista 5,750
Expenses related to architect
Orlando Regis 24,000
No similar statement was provided for 1993.
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