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titles from the city council before building on them. Respondent
argues that legal expenses relating to title issues are not
deductible as ordinary and necessary business expenses but should
be added to the basis of each property to which they relate.
We agree with respondent. The cost of defending or
perfecting title to property constitutes a capital expenditure
and no deduction shall be allowed for it. Estate of Franco v.
Commissioner, T.C. Memo. 1980-340; Cowden v. Commissioner, T.C.
Memo. 1965-278, affd. per curiam 365 F.2d 832 (1st Cir. 1966);
sec. 1.263(a)-2(c), Income Tax Regs. The only evidence presented
by Mr. Strong and SCC shows that these legal fees were for
defending or perfecting title. In his testimony, Mr. Strong did
not relate these expenses to specific properties sold during the
years at issue. Therefore, the legal fees of $2,835 and $4,000
paid in 1993 and 1994, respectively, are not currently deductible
to SCC.
3. Charitable Contributions
SCC claimed deductions for charitable contributions of
$73.14 for 1991, $220 and $80 for 1992, and $80 for 1993. Of
these amounts, respondent allowed only the $80 charitable
contribution for 1992. Respondent contends that SCC failed to
provide the required documentation to substantiate the remaining
charitable deductions.
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