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Cong., 2d Sess. (1942), 1942-2 C.B. 372. In Whipple v.
Commissioner, 373 U.S. 193, 200 (1963), the Supreme Court
explained:
section 23(a) [the predecessor of section 162(a)] was
amended not by disturbing the Court's definition of
“trade or business” but by following the pattern that
had been established since 1916 of “[enlarging] the
category of incomes with reference to which expenses
were deductible,” to include expenses incurred in the
production of income. [Citations omitted.]
The 1942 amendment divided the old section 23(a) into two
parts. One, section 23(a)(1), dealt with the previously
deductible “trade or business” expenses, now covered by section
162; the other, section 23(a)(2), dealt with a new category of
deductions relating to nontrade or nonbusiness expenses, now
covered by section 212. The new category was intended to allow
deductions regarding certain income- or profit-oriented
activities, notwithstanding the absence of a “trade or business”.
See Carbine v. Commissioner, 83 T.C. 356, 360-361 (1984), affd.
779 F.3d 662 (11th Cir. 1985). The reasoning behind the adoption
of section 212 supports respondent’s contention that petitioner
is allowed deductions related to his income-producing activities
to collect his judgment against the State only to the extent
provided under that statute. Petitioner’s situation is analogous
to that of the taxpayers in Usry v. Price, 325 F.2d 657 (5th Cir.
1963), and Feagans v. Commissioner, 23 T.C. 208 (1954).
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