Court Opinion

ID: 9461512
Source: CourtListenerOpinion
Date Created: 2023-08-04 22:16:08.625675+00
Date Added: 2024-06-11T17:37:05.853587
License: Public Domain

CLARK, Circuit Judge,
with whom
BELL, COLEMAN, RONEY and GEE, Circuit Judges, join, dissenting:
The filing fee paid by Justice Nichols was not paid into a political party general campaign fund. Rather, it was used to defray the necessary cost of conducting the party primary. Justice Nichols was not opposed in the primary or in the general election; therefore, merely entering the primary was tantamount to election. He had to pay the fee to continue in the only job he had. In no pragmatic sense could it be said that he incurred the expense in “trying to be a judge.” Whether the fee is viewed as a tax or as an ordinary and necessary expense, to be deductible, it must be incurred in carrying on a trade or business under section 162 or an activity described under section 212. Justice Nichols
paid the fee because it was an absolute business necessity to the continued production of his livelihood.
*621The Supreme Court in McDonald, and this court in Campbell, foreclosed deductibility in a conscious effort to stay out of the political thicket. I cannot dispute the wisdom of such reasoning. However, business deductions which can be as easily segregated from political considerations, such as this fee exacted from Justice Nichols for the right to retain his job, pose no danger to the public policy consideration underlying the decision in McDonald.
While Campbell is not distinguishable on its facts from the case at bar, McDonald is. Judge McDonald not only paid a substantially larger fee than Justice Nichols, Judge McDonald’s fee went into a political party “war chest” to defray all manner of campaign expenses. Judge McDonald was opposed and, in fact, lost the election. His contribution was necessary to obtain party support and to influence voters. He was trying to win an election to be a judge in the future. In McDonald the Court also dealt with a deduction for “campaign expenses”. In the case at bar, there were no related campaign expenses because there was no campaign.
At the conclusion of the opinion in McDonald, the Supreme Court clearly indicated that it was depending on the Tax Court to apply the principle it there announced to the “quagmire of particularities” involved in a “detailed analysis of the special circumstances of various ‘businesses’ and expenses incident to their ‘carrying on’.” The Tax Court has exercised this function and allowed deductions in situations analogous to the case at bar, notably in the area of employment agency fees.
Fees paid to employment agencies have been held to be deductible on the basis that the expenditures were incurred by the taxpayer in carrying on his trade or business. The expense is deemed ordinary and necessary to improving the taxpayer’s position in his trade or business albeit under a different employer. See Primuth v. Commissioner, 54 T.C. 374 (1970); Kenfield v. Commissioner, 54 T.C. 1197 (1970); Cremona v. Commissioner, 58 T.C. 219 (1972). In Primuth the Tax Court determined that Primuth was in the trade or business of being a corporate executive. The court also refused to condition deductibility on whether the fee was contingent on obtaining employment or not. The Tax Court allowed the deduction in Kenfield even though the taxpayer did not accept the job offer which resulted from the employment agency’s efforts. In Cremona the fee was deductible despite the lack of success in finding employment for the taxpayer. There is no valid reason for allowing the deduction for the fees paid by these taxpayers as a prerequisite for obtaining a better position and disallowing the deduction for the fee paid by Justice Nichols as a prerequisite for continuing in his job.
It would not be inconsistent with McDonald, for the court en banc to depart from that portion of its decision in Campbell which denies deductibility to the fee paid by one situated as Justice Nichols. Campbell unnecessarily restricts McDonald and precludes the exercise of the discretion that holding granted to the Tax Court to analyze specific deductions claimed to constitute proper business expenses.