20 T.C. 511, 1953 U.S. Tax Ct.
CASE SYNOPSIS: Petitioner taxpayers
sought review of a decision of respondent Commissioner of Internal
Revenue, who had determined an income tax deficiency against the
taxpayers for 1946 in the amount of $ 2,914. The Commissioner had
disallowed the taxpayers' deductions of traveling expenses and legal
fees incurred while the taxpayers searched for and investigated
newspaper and radio properties to purchase.
FACTS: The taxpayers attempted to deduct $ 5,965 in traveling expenses and legal fees from their federal income taxes for 1946. The taxpayers had incurred the expenses and fees while searching for and investigating newspaper and radio properties to purchase. The taxpayers based their claim for deductions upon I.R.C. §§ 23(a)(1), 23(a)(2), 23(e)(2). The Commissioner disallowed the deductions and determined an income tax deficiency against the taxpayers for 1946 in the amount of $ 2,914. The taxpayers sought review of the Commissioner's decision. The court entered a decision in the Commissioner's favor.
ANALYSIS:
The court held in part that: (1) the travel expenses and legal fees were not deductible under I.R.C. § 23(a)(1) because the taxpayers were not engaged in any trade or business at the time the expenses were incurred; and (2) the travel expenses and legal fees were not deductible under I.R.C. § 23(e)(2) because the only transaction entered into by the taxpayers for profit was the actual purchase of an Ohio newspaper in November 1946.
CONCLUSION: The court sustained the Commissioner's determination of an income tax deficiency against the taxpayers.
FACTS: The taxpayers attempted to deduct $ 5,965 in traveling expenses and legal fees from their federal income taxes for 1946. The taxpayers had incurred the expenses and fees while searching for and investigating newspaper and radio properties to purchase. The taxpayers based their claim for deductions upon I.R.C. §§ 23(a)(1), 23(a)(2), 23(e)(2). The Commissioner disallowed the deductions and determined an income tax deficiency against the taxpayers for 1946 in the amount of $ 2,914. The taxpayers sought review of the Commissioner's decision. The court entered a decision in the Commissioner's favor.
ANALYSIS:
The court held in part that: (1) the travel expenses and legal fees were not deductible under I.R.C. § 23(a)(1) because the taxpayers were not engaged in any trade or business at the time the expenses were incurred; and (2) the travel expenses and legal fees were not deductible under I.R.C. § 23(e)(2) because the only transaction entered into by the taxpayers for profit was the actual purchase of an Ohio newspaper in November 1946.
CONCLUSION: The court sustained the Commissioner's determination of an income tax deficiency against the taxpayers.
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