Lykes v. United States,
343 U.S. 118 (1952)

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U.S. Supreme Court

Lykes v. United States, 343 U.S. 118 (1952)

Lykes v. United States

No. 173

Argued November 29-30, 1951

Decided March 24, 1952

343 U.S. 118


Under § 23(a)(2) of the Internal Revenue Code, an individual taxpayer was not entitled to deduct from his gross income, for federal income tax purposes, an attorney's fee paid for contesting the amount of his federal gift tax in the circumstances of this case. Pp. 343 U. S. 119-127.

(a) The attorney's fee was not deductible under § 23(a)(2) as an expense "for the production or collection of income." Pp. 343 U. S. 121-124.

(b) There is no adequate basis in the record in this case for holding the attorney's fee deductible under § 23(a)(2) as an incident of petitioner's "management, conservation, or maintenance of property held for the production of income." Pp. 343 U. S. 124-125.

(c) Expenses for legal services do not become deductible merely because they are paid for services which relieve a taxpayer of liability, nor because the size of the claim to which the services relate is large in proportion to the income-producing resources of the taxpayer, nor because the claim, if allowed, will consume income-producing property of the taxpayer. Pp. 343 U. S. 125-126.

(d) The result here reached is not inconsistent with 1944 Treasury Regulations, and it is in accord with specific provisions of Treasury Regulations since 1946, containing an administrative interpretation of § 23(a)(2) which is entitled to substantial weight, especially since Congress has made many amendments to the Internal Revenue Code without revising that administrative interpretation. Pp. 343 U. S. 126-127.

188 F.2d 964, affirmed.

In a suit for a refund of federal income tax, the District Court entered judgment for petitioner. 84 F.Supp. 537. The Court of Appeals reversed. 188 F.2d 964. This Court granted certiorari. 342 U.S. 810. Affirmed, p. 343 U. S. 127.

Page 343 U. S. 119

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