Court Opinion

ID: 9444847
Source: CourtListenerOpinion
Date Created: 2023-08-03 21:14:14.34925+00
Date Added: 2024-06-11T17:30:02.254004
License: Public Domain

POPE, Circuit Judge
(concurring specially) .
I agree with much that is said in the opinion, but I have reservations concerning what is said respecting the application of the rule of Trust of Bingham v. Commissioner, 325 U.S. 365, 65 S.Ct. 1232, 89 L.Ed. 1670, to the facts of this case. The opinion here treats the Bing-ham case as one turning on determination of a question of fact. On the contrary, the facts there, as here, were not in dispute. The questions for decision related solely to the meaning of the words of § 23(a) (2), “ ‘property held for the production of income.’ ” Said the Court: “They are ‘clear cut’ questions’ of law.” After that section was added to the code in 1942 to abrogate the rule of Higgins v. Commissioner, 312 U. S. 212, 61 S.Ct. 475, 85 L.Ed. 783, the Supreme Court rejecting the Commissioner’s narrow view of the new section, held in the Bingham ease that the section should have a liberal interpretation, to the end that a taxpayer engaged in the management of property which produces income should be allowed the same type of deductions as would Be allowed if his activities were a trade or business.
If Tressler had been in business, and efforts were made to have a receiver appointed for certain property used in that business, legal expense in resisting the proposal, or in an attempt to discharge a receiver, would be deductible as a matter of course. Whether that defense was wisely conducted, or vitally necessary, would be no concern of the tax authorities. Here the attempted receivership concerned property which produced income. Assuming, as did the Florida court and the Tax Court, that this was in truth and in fact the taxpayer’s property, I think it could well be contended that his efforts to resist the receivership were for the conservation of property held for the production of income, and legal expenses to that end were deductible within the principle of the Bingham case.
While I thus view this matter differently from the majority, I think the result reached by the Tax Court must be affirmed. The expense of resisting the wife’s action in its entirety was not deductible under the rule of Howard v. Commissioner, 9 Cir., 202 F.2d 28. Had there been proof of just what legal expense was attributable to the receivership of this income-producing property, the case would be otherwise. In McMur-try v. United States, 132 F.Supp. 114, the Court of Claims, after rejecting a motion to dismiss, held that the taxpayer whose lawyers had been employed to *363resist his wife’s demands that a large block of his income-producing stock be placed in trust, could prove, in support of his claimed right to deduct attorneys’ fees, “what proportion of the legal services were utilized in resisting his wife’s demands against specific income-producing property”. (Emphasis mine).1 The lack of proof of this proportion here requires an affirmance of the Tax Court decision.

. The necessity of apportioning the legal expense as between that incident to defending the main action, and that incident to releasing the impounded property, is similar to that required in making proof of damages by way of attorneys’ fees in a suit upon an attachment bond. See Reachi v. National Auto & Cas. Ins. Co., 37 Cal.2d 808, 236 P.2d 151.