Document: 356 U.S. 27 78 S.Ct. 512 2 L.Ed.2d 559 COMMISSIONER OF INTERNAL REVENUE, Petitioner,v.Neil SULLIVAN and Grace Sullivan; James Ross Ann Ross; Sam Mesi. No. 119. Argued Jan. 30, 1958. Decided March 17, Sol. Gen. J. Lee Rankin, Washington, D.C., for petitioner. Mr. Eugene Bernstein, Chicago, Ill., respondents. Justice DOUGLAS delivered the opinion of Court. 1 The question is whether amounts expended to lease premises hire employees conduct alleged illegal gambling enterprises are deductible as ordinary necessary business expenses within meaning § 23(a)(1)(A) Internal Revenue Code 1939.1 taxpayers received income from bookmaking establishments in Ill. Tax Court found that these were under Illinois law,2 acts performed by constituted violations law, payment rent use purpose was also law. accordingly held amount paid wages could not be deducted gross since those deductions expenditures made connection with acts. 15 CCH TC Mem. Dec. 23, 25 T.C. 513. Appeals reversed, 241 F.2d 46, 242 558, on basis its prior decision Commissioner v. Doyle, 7 Cir., 231 635. case here a petition certiorari, 354 920, 77 1381, 1435, consideration companion cases Hoover Motor Express Co. United States, 38, 511, Tank Truck Rentals, Inc., Commissioner, 507. 3 Deductions matter grace Congress can, course, disallow them it chooses. At times policy certain condemned activities clear. It so Regulations Textile Mills Securities Corp. 314 326, 62 272, 86 L.Ed. 249. Any inference disapproval absent here. Regulations, indeed, point other way, they make federal excise tax wagers an expense.3 This seems us recognition enterprise purposes. allows deduction sufficiently hospitable allow normal operate it. We said Heininger, 320 467, 474, 64 249, 254, 88 171, 'fact expenditure bears remote relation act' does nondeductible. And see Lilly 343 90, 72 497, 96 769. If we enforce rule espoused this case, would come close making type taxable receipts, while all net income. choice made, should do landlord 'ordinary expenses' accepted words. That enough permit deduction, unless clear allowance device avoid consequence supra, Inc. or otherwise contravenes expressed statute regulation, supra. 4 Affirmed. Section provides: 'In computing there shall allowed deductions: 'All incurred during year carrying any trade business, including reasonable salaries compensation personal services actually rendered; * rentals payments required condition continued possession, purposes property which taxpayer has taken taking title he no equity.' 53 Stat. 12, amended 56 819, 26 U.S.C. 23(a)(1)(A), U.S.C.A. 23(a)(1)(A). Ill.Rev.Stat.1945, c. 336. Treas.Reg. 118, 39.23(a)—1: Rev.Rul. 54—219, 1954—1 Cum.Bull. 51: 'The Federal section 3285(d) special 3290 persons engaged receiving deductible, purposes, 23(a) Code, provided accepting conducting wagering pools lotteries, behalf person liable Code.'

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