Cliff Connors - Page 18

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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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