Neil T. Nordbrock - Page 12




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          commenced in an attempt by petitioners to save business property            
          from seizure by the IRS.  Mr. Nordbrock testified that the only             
          creditor in the bankruptcy was the IRS, and the debt to the IRS             
          resulted from $75,000 in preparer penalties.  See United States             
          v. Nordbrock, 38 F.3d 440 (9th Cir. 1994).  Respondent argues               
          that these expenses are personal expenses and not deductible                
          business expenses.  Petitioners have not persuaded us that the              
          bankruptcy-related expenses were ordinary and necessary business            
          expenses and have not provided us with a basis for allocating the           
          fees between personal services and business services.                       
          Petitioners presented copies of checks that were payable to the             
          attorney who filed the bankruptcy proceeding.  They did not,                
          however, present any invoices that explained the services                   
          provided by the attorney.  See In re Collins, 26 F.3d 116 (11th             
          Cir. 1994); Dowd v. Commissioner, 68 T.C. 294, 303-304 (1977).              
               Some of the payments claimed as deductible were made to the            
          trustee in bankruptcy.  Those payments relate to the preparer               
          penalties, inasmuch as petitioner testified that the only                   
          creditor in the bankruptcy was the IRS and that the seizure of              
          property that he was trying to defeat was for $75,000 in unpaid             
          preparer penalties that were assessed against him.  The nature of           
          the payments is not clear.  If the payments were for monthly                
          fees, as petitioner testified, they suffer from the same                    
          infirmity as the legal fees.  If they were payments on account of           






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