Legal Document

356 U.S. 27 78 Supreme Court Reporter 512 2 United States Reports Lawyer’s Edition 2d Series KF101.8 U54 559 COMMISSIONER OF INTERNAL REVENUE, Petitioner,v.Neil SULLIVAN and Grace Sullivan; James Ross Ann Ross; Sam Mesi. Number 119. Argued Jan. 30, 1958. Decided March 17, Sol. Gen. Judge 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 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 Commerce Clearing House TC Mem. Dec. 23, 25 KF6280 A2 U55 513. Appeals reversed, 241 Federal Reporter, 2nd 46, 242 558, on basis its prior decision Commissioner versus Doyle, 7 Cir., 231 635. case here a petition certiorari, 354 920, 77 1381, 1435, consideration companion cases Hoover Motor Express company 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 Corporation 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, Incorporated 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 Statutes-at-Large 12, amended 56 819, 26 KF62 23(a)(1)(A), Annotated KF65 U5 23(a)(1)(A). Ill.Rev.Stat.1945, chapter 336. Treas.Reg. 118, 39.23(a)—1: Rev.Rul. 54—219, 1954—1 Cum.Bull. 51: 'The section 3285(d) special 3290 persons engaged receiving deductible, purposes, 23(a) Code, provided accepting conducting wagering pools lotteries, behalf person liable Code.'

Classification Label: 11