Bowers v. Lumpkin
United States Court of Appeals for the Fourth Circuit
140 F.2d 927 (1944)
Relevant factsFree
Lumpkin (plaintiff) inherited half the stock of a corporation and purchased the rest, but the South Carolina Attorney General challenged the validity of her purchase. Lumpkin successfully defended her title in litigation, incurring $250 in legal fees in 1936 and $26,798.22 in 1937, which she deducted as ordinary and necessary expenses. The Commissioner (defendant) disallowed the deductions and assessed additional tax; Lumpkin paid under protest and sued in federal district court, which ruled in her favor.
IssueFree
Whether legal expenditures incurred in defending or perfecting title to property are deductible as ordinary and necessary business expenses.