Dieter Stussy - Page 9

                                        - 9 -                                         
               refund of any tax, whether the taxing authority be                     
               Federal, State, or municipal, and whether the tax be                   
               income, estate, gift, property, or any other tax, are                  
               deductible.  Thus, expenses paid or incurred by a                      
               taxpayer for tax counsel or expenses paid or incurred                  
               in connection with the preparation of his tax returns                  
               or in connection with any proceedings involved in                      
               determining the extent of tax liability or in                          
               contesting his tax liability are deductible.  [Sec.                    
               1.212-1(l), Income Tax Regs.]                                          
               We find that all of the disputed mileage was an ordinary and           
          necessary expense paid by petitioner during 1998 in connection              
          with the determination of his Federal and State income taxes.2              
          We conclude on the basis of this finding that the mileage is                
          properly deductible as a miscellaneous itemized deduction under             
          section 212(3).  Whereas we agree with respondent that section              
          262 generally precludes any deduction for personal expenses, and            
          that this mileage is all attributable to petitioner’s personal              
          income taxes, we also observe that the exception in section                 
          212(3) for expenses of contesting tax liabilities was prescribed            
          specifically by the Congress to allow taxpayers to deduct a                 

          2 Although the 165.5 miles which petitioner claims to have                  
          driven for the copying and filing of his personal income tax                
          returns appear to be high considering that petitioner lived in a            
          large metropolis, the parties have stipulated that petitioner               
          incurred all of these miles for the “copying and filing of his              
          personal federal and state income tax returns”.  Respondent does            
          not claim that the amount of these miles is excessive.                      

Page:  Previous  1  2  3  4  5  6  7  8  9  10  Next

Last modified: May 25, 2011