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financial statements and tax forms. Petitioner filed a similar
action in the U.S. District Court, District of South Carolina,
Columbia Division, on April 4, 2002. Whether petitioner may
deduct in taxable year 2001 the legal fees he incurred in filing
those actions is the only issue remaining in the instant case.1
Discussion
Individuals are allowed a deduction for ordinary and
necessary expenses paid or incurred during the taxable year in
connection with the determination, collection, or refund of any
tax. Sec. 212(3). Cash method taxpayers may deduct expenses
when they are actually paid. Sec. 1.446-1(c)(1)(i), Income Tax
Regs.
Respondent contends that petitioner’s legal expenses are not
properly deductible for taxable year 2001 because they were not
paid in that year. Petitioner contends the expenses are
1Petitioner did not receive several Forms 1099 because of
the above-mentioned restrictions. Nonetheless, petitioner timely
filed his 2001 tax return based on the limited information he had
received. Respondent determined a $743 deficiency in tax for
petitioner’s taxable year 2001 and issued a notice of deficiency
on Feb. 2, 2004. Respondent conceded that petitioner was allowed
certain deductions for expenses related to rental property
petitioner owned. Respondent did not allow, however, a deduction
for $2,915 in legal fees associated with petitioner’s lawsuits
that were incurred during taxable year 2002.
At trial, petitioner asked the Court to order respondent to
provide him with appropriate Federal income tax forms to allow
him to file his tax returns. Respondent has agreed to provide
petitioner with the appropriate forms. Accordingly, we do not
address this issue.
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Last modified: May 25, 2011