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62(a)(2)(A). Mr. Biehl’s attorney’s fee fails to satisfy the
business connection requirement. An expense satisfies the
business connection requirement only if it was incurred pursuant
to a reimbursement arrangement by an employee performing services
on behalf of the employer who is required to provide the
reimbursement. Our conclusion is required by the express
language of section 62(a)(1) and (2)(A), the accountable plan
regulations, the caselaw, and the legislative history of
reimbursement arrangements.
Section 62(a)(1) allows taxpayers to deduct from gross
income in arriving at adjusted gross income those “deductions
* * * which are attributable to a trade or business carried on by
the taxpayer, if such trade or business does not consist of the
performance of services by the taxpayer as an employee.” An
expense is “attributable to a trade or business” if the expense
satisfies the origin of the claim test for the purposes of
deductibility.
The difference in the ways in which paragraphs (1) and
(2)(A) of section 62(a) are interpreted is highlighted by Guill
v. Commissioner, 112 T.C. 325 (1999). An independent contractor
former insurance agent incurred legal costs of $151,896 in
prosecuting his civil action for actual and punitive damages
11(...continued)
finding, we need not consider in any detail the
remaining required findings * * *
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