Gilliam v. Commissioner
United States Tax Court
51 T.C.M. 515 (1986)
Relevant factsFree
Artist and instructor Gilliam (plaintiff), with a history of psychiatric hospitalization, had a severe adverse reaction to new medication during a business-trip flight, acting irrationally and injuring another passenger, leading to criminal charges (resulting in a not-guilty-by-reason-of-insanity finding) and a settled civil lawsuit; Gilliam deducted roughly $25,000 in related legal fees as ordinary business expenses, but the tax commissioner (defendant) disallowed the deduction, and Gilliam petitioned the Tax Court for redetermination.
IssueFree
Whether legal fees not incurred as an ordinary expense of a trade or business are deductible under federal tax law.