-8-
involved claims of breach of fiduciary duty, failure to pay rent,
and failure to make appropriate partnership contributions.
Oakland 3 was a lawsuit in which Pomeroy had accused petitioner
of, among other things, taking over H.K. Peach and otherwise
breaching his fiduciary duty. With respect to all these
proceedings, petitioner claimed in 1995 as a deduction legal fees
of $90,392 (relating to Oakland 1 and Oakland 2) and $770
(relating to Oakland 3).
For 1996, petitioner incurred legal expenses in the
following proceedings which are at issue in this case: (1)
Oakland 1, (2) Oakland 2, (3) Oakland County Case No. 91-413076-
CK (Oakland 4), and (4) Oakland County Case No. 93-455889
(Oakland 5). Oakland 4 was a lawsuit where petitioner sued
individually and on behalf of REH1 as coplaintiffs. The case
included an allegation against Pomeroy and others for a failure
to account for profits. Oakland 5 was a lawsuit by Pomeroy and
his business partner, whose name is not material to this
proceeding, to compel petitioner to turn over his partnership
interest in TROY-SAK pursuant to an agreement. In 1996,
petitioner claimed as a deduction legal fees of $57,799 (relating
to Oakland 1, Oakland 2, Oakland 3, Oakland 4, and Oakland 5).
Respondent maintains that petitioner may not deduct these
amounts because he is not engaged in “any trade or business”
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