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portion of the litigation recovery. Commissioner v. Banks, 543
U.S. 426 (2005). Section 212 allows a deduction for all of the
ordinary and necessary expenses paid or incurred during the
taxable year for the production or collection of income. Sec.
212(1). The attorney’s fees paid by petitioner would be allowed
as a itemized deduction under this section. The deduction would,
however, be subject to the 2-percent floor under section 67
because it does not fall under any of the section 67(b)
exclusions. Respondent has conceded that petitioner may deduct
his attorney’s fees of $29,626.83 ($6,595.72 + $8,831.11 +
$14,200 = $29,626.83) incurred in 2002 as a miscellaneous
itemized deduction for that year under section 67, subject to the
2-percent floor. See Commissioner v. Banks, supra at 432.
In regard to the insurance benefit paid to petitioner in
2002, section 451(a) provides that the amount of any item of
gross income shall be included in the gross income for the
taxable year in which received by the taxpayer unless, under the
method of accounting used in computing taxable income, such
amount is to be properly accounted for in a different period.
Income is constructively received by a taxpayer in the taxable
year in which such income is credited to the taxpayer’s account,
is set apart for the taxpayer, or is otherwise made available so
that the taxpayer could have drawn upon it during the taxable
year if notice of intention to withdraw had been given. Income
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