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contrast, the issue of disposition does not arise in Oakland 2.
Therefore, we disagree that on that basis, petitioner must
capitalize these expenses. We hold that they are deductible
under section 162(a), just like the other legal fees incurred by
virtue of Oakland 2.
The last segment of the legal expenses at issue pertains to
1996. That amount ($57,799) was incurred during that year by
petitioner in connection with Oakland 1, Oakland 2, Oakland 3,
Oakland 4, and Oakland 5. As we have already discussed the
deductibility of the litigation expenses relating to the first
three proceedings and find the reasoning equally applicable here,
we focus our analysis on the fees relating to Oakland 4 and
Oakland 5.
Petitioner brought the Oakland 4 suit individually and as a
shareholder of REH1. The suit included claims for breach of
fiduciary duty by Pomeroy and others, by virtue of their managing
the affairs of REH1 to the exclusion of petitioner and to the
possible detriment to REH1. Petitioner sought the appointment of
a receiver for REH1 and damages for failure to account for and
distribute corporate profits to petitioner and REH1.
In Oakland 5, petitioner was forced to defend against
Pomeroy and others who were trying to compel the surrender of his
interest in TROY-SAK pursuant to the terms of the TROY-SAK
partnership agreement. In response to petitioner’s earlier
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