Document: 372 U.S. 53 83 S.Ct. 618 9 L.Ed.2d 580 UNITED STATES, Petitioner,v.Talbot PATRICK et al. No. 22. Reargued Dec. 6, 1962. Decided Feb. 18, 1963. Wayne G. Barnett, Washington, D.C., for petitioner. Robert M. Ward, Rock Hill, S.C., respondents. Mr. Justice HARLAN delivered the opinion of Court. 1 This case presents question, similar to that decided today in 21, United States v. Gilmore, 39, 623, as deductibility certain legal fees paid by respondent his attorneys and representing wife connection with divorce proceedings instituted wife. In a suit refund contesting Commissioner's disallowance such deduction claimed taxpayer's 1956 federal income tax return, District Court Western South Carolina held these expenses be deductible under § 212(2) Internal Revenue Code 19541 186 F.Supp. 48, Appeals affirmed, 288 F.2d 292, we granted certiorari on Government's petition, 368 817, 82 57, 7 22.2 2 1955 respondent's wife3 sued divorce, alleging adultery part her husband. Extended negotiations both parties resulted property settlement agreement, thereafter filed answer complaint neither admitting nor denying allegations adultery. Respondent did not testify at trial. The court an absolute approved accordance therewith ordered pay attorneys' parties. 3 At time proceedings, was president Herald Publishing Company Carolina, editor newspaper published it. He owned 28% corporation's outstanding stock, 28%, their oldest son, Hugh Patrick, 9%, remaining 35% trusts parties' two minor children. real which situated wife, former having 80% undivided interest latter 20% interest. couple also houses. addition, each independently diversified securities other assets substantial value. 4 agreement recited 'by virtue this final lump has been made any all rights whatsoever * concerning matter support, separate maintenance, alimony or financial obligation sort due (the wife) account growing out marital relationship *.' Besides provisions custody support children provision giving one houses parties, arrangements were respective interests properties. high-quality worth $112,000, agreed value publishing company she transferred him subject condition stock should go three event death sale entire business. A new long-term lease housing entered into corporation, then trust, therefrom being payable life remainder pass equal shares Finally, wife's services rendered arrangements. 5 These fees, 1956, amounted $24,000 $12,000 attorneys. total allocated counsel follows: $4,000 handling itself; $16,000 rearranging company; leasing transferring it trust. item ($3,200) relating business estate. 6 Both courts below $19,200 1954 'ordinary necessary (expense) incurred management, conservation, maintenance production income.' contention personal expense, nondeductible 262 Code,4 rejected. Relying Baer Commissioner, 8 Cir., 196 646, cases following (see pp. 49—51, 629—630), found resist liability, but arrange how could met without depriving taxpayer income-producing property, loss would have destroyed capacity earn income. provisions, so lower held, designed satisfy obligations protect children, yet same preserve control over company, he had devoted many years effort. situation, short, is comparable supra. principles governing are equally applicable here. It evident claims asserted action arose from thus product family life, profit-seeking activity. As payments purpose discharging 'business' expenses. We find no significant distinction fact arranging transfer interests, creating trust rather than conducting litigation. matters incidental litigation brought whose arising origin itself settled 'growing relationship,' supra, p. 55, that, although nominally purchase served ultimately assertion latent rights. unsound make turn nature measures taken forestall claim source itself. Gilmore case, need alternative sought deducted here all, capital outlays. Since hold expenses, makes difference present purposes whether they expenditures; either deductible.5 10 conclude none deductible, judgment accordingly reversed. 11 Reversed. 12 BLACK DOUGLAS dissent. Section 212 provides, pertinent part: 'In individual, there shall allowed ordinary during taxable year—* (2) argued 1961 Term, restored calendar reargument Term. 369 835, 864, 841. Patrick will referred sole respondent. administrator estate second party only because joint return filed. Respondent's 'wife' notwithstanding divorce. provides: 'Except otherwise expressly provided chapter, personal, living, expenses.' view our conclusion do reach least prior decisions See, e.g., Magruder Supplee, 316 394, 62 1162, 86 L.Ed. 1555; Interstate Transit Lines 319 590, 63 1279, 87 1607.

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