Sept 26 - September 26, 2006 Federal Income Tax Notes...

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September 26, 2006 Federal Income Tax Notes Gilmore Case: Mrs. Gilmore filed for divorce on basis of adultery. Wanted the stock in his car dealership corporations. Mr. Gilmore just wanted to keep control of his companies so that she didn’t cut him off from salary and so that General Motors didn’t cancel his relationships on basis of adultery. He was able to keep the stock. Are the legal fees deductible as a business expense? Section 212: Expenses for production of Income. IN the case of the individual, there shall be allowed as a deduction all the ordinary and necessary expense paid or incurred during the taxable year -- 1) for the production of income 2) for the management, conservation, or maintenance of property held for the production of income; or 3) in connection with the determination, allocation, or refund of any tax. IRS said that it needs to be a test of the origin of the expenses. Origin was divorce, which is not business-related but personal. (Origin of the Claim Test), as opposed to consequences. Courts sided with IRS, only can deduct those expenses related to profit-seeking
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This note was uploaded on 04/16/2008 for the course LAW Tax taught by Professor Infanti during the Fall '06 term at Indiana.

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Sept 26 - September 26, 2006 Federal Income Tax Notes...

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