Meyer J. Fleischman v. Commissioner
United States Tax Court
45 T.C. 439 (1966)
Meyer Fleischman and Joan Francis signed an antenuptial agreement in 1955, providing that on divorce Meyer would pay Joan $5,000 in exchange for her releasing all claims to his property. When Joan sought divorce in 1961, she also sued separately to invalidate the antenuptial agreement and obtain a fair share of Meyer's property, since the divorce court itself lacked authority to rule on the agreement's validity. The divorce was finalized in 1962, and Joan's separate suit to invalidate the agreement was dismissed. Meyer paid $3,000 in legal fees defending that suit and deducted them as an ordinary and necessary expense under section 212 of the tax code; the Commissioner (defendant) disallowed the deduction.
Whether legal expenses are deductible as incurred for the production or conservation of income when the underlying claim arose solely out of the parties' marital relationship.