Williams v. McGowan case brief

Williams v. McGowan case brief summary
152 F.2d 570 (1945)

CASE SYNOPSIS

Plaintiff appealed the lower court's dismissal of his complaint to recover income taxes pursuant to 26 U.S.C.S. § 23(a)(2) and 26 U.S.C.S. § 117(a)(1).

CASE FACTS
Plaintiff claimed that money he paid attorneys to secure the refund of taxes was deductible, and that income from the sale of a partnership, sold at a loss, was ordinary income. The lower court found that the business was a capital asset and the attorney costs were not tax deductible.

DISCUSSION

• The court found that a recent controlling decision established that attorney expenses were deductible. 
• The court found that Congress plainly did not intend a business to be regarded, as a whole, as a capital asset, because its stock in trade, property held for sale to customers, and depreciable business property were not classifiable as capital assets. 
• Plaintiff was selling fixtures, depreciable goodwill, and receivables about which defendant Collector of Internal Revenue had failed to argue their lack of depreciability.

CONCLUSION
The judgment was reversed, as Congress plainly did not mean for a business to be regarded, as a whole, as a capital asset, because its stock in trade, property plaintiff held for sale to customers, and depreciable business property were not classifiable as capital assets.

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