Joseph W. Harris v. United States

The taxpayer has appealed from a judgment of the District Court which held that that portion of his attorney fees in his divorce action which was chargeable to the community property issue was not deductible under Section 23(a) (2) of the 1939 Internal Revenue Code, 26 U.S.C.A. § 23 (a) (2), as “ * * * ordinary and necessary expenses paid -x- * * for £he management, conservation, or maintenance of property held for the production of income.”

The facts were largely stipulated. In the divorce suit, Harris contended that there was no community property, while his wife claimed that at'least part of the property standing in Harris’ name was community. Harris had real estate valued at approximately $415,000, which was almost the sole source of his income. The court found that the community interest was worth $170,000, and awarded $65,000 to the wife. The trial of the community property issue lasted five weeks; there were no negotiations for a settlement. After the trial, it was agreed that the wife’s interest would be paid in cash.

It is undisputed that the property involved was held for the production of income. Harris contends that his attorneys were primarily engaged in preventing…