-22-
Regardless of the success of those claims, petitioner did not
seek to create a separate or distinct asset, produce a
significant future benefit, or acquire a capital asset. Again,
to the extent a benefit inured to petitioner by virtue of
defending and counterclaiming in this lawsuit, it appears to us
more immediate than future, in that an imminent harm to
petitioner would ensue if he failed to defend himself in this
proceeding.
Examination of the fees incurred in Oakland 2 yields the
same result. Those fees were (1) paid or incurred during 1995,
(2) incurred in connection with carrying on petitioner’s trade or
business, (3) an expense, (4) a necessary expense in that
petitioner’s participation in the lawsuit was mandated by virtue
of claims brought against him, and (5) an ordinary expense in
that businessmen such as petitioner, who are actively and closely
involved in a trade or business, are subject to litigation and to
incurring the associated expenses. As for the origin of the
claim in Oakland 2, we do not find the claim to have sought to
create a separate or distinct asset, produce a significant future
benefit, or acquire a capital asset.
Again, respondent argues that the similarity of these claims
to those in Lin v. Commissioner, supra, dictates the conclusion
that the fees at issue in Oakland 1 and Oakland 2 must be
capitalized. We disagree. Just as we observed with respect to
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