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miscellaneous itemized deductions on Schedule A. See secs.
67(b), 212(l); Test v. Commissioner, supra. It is well
established that even though a taxpayer’s employee status may be
regarded as a trade or business, legal fees stemming from a
taxpayer’s employee status are not deductible in computing
adjusted gross income but are to be treated as miscellaneous
itemized deductions. Test v. Commissioner, supra.
The case Smyth v. Daou Systems, Inc., No. 97-CV-02013 (S.D.
Cal. filed Nov. 7, 1997), is related to petitioner’s former
employment with Daou Systems. As a result of the litigation,
petitioner recovered a total of $8,000 from Daou Systems (which
was subject to withholding). The net amount of $5,918.82 was
actually paid to petitioner’s attorney, Mr. Conger, who deducted
his legal fees of $1,689.65 and paid the remainder to petitioner.
The Court concludes that petitioner is entitled to deduct
$1,689.65 as a miscellaneous itemized expense on Schedule A,
subject to the overall 2-percent of adjusted gross income
limitation.
The Court has considered all of petitioner’s contentions,
arguments, requests, and statements. To the extent not discussed
herein, we conclude that they are meritless, moot, or irrelevant.
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