Adolph B. Canelo III and Sally M. Canelo v. Commissioner of Internal Revenue, Thomas J. Kane, Jr., and Kathryn H. Kane v. Commissioner of Internal Revenue

447 F.2d 484 71-2 USTC P 9598 Adolph B. CANELO III and Sally M. Canelo, Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Appellee. Thomas J. KANE, Jr., and Kathryn H. Kane, Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Appellee. Nos. 26157, 26158. United States Court of Appeals, Ninth Circuit. Aug. 11, 1971. Hart H. Spiegel (argued), Thomas Silk, Jr., of Brobeck, Phleger & Harrison, San Francisco, Cal., for appellants. William Friedlander (argued), K. Martin Worthy, Chief Counsel, Johnnie M. Walters, Asst. Atty. Gen., Washington, D.C., for appellee. Before HAMLEY and KOELSCH, Circuit Judges, and GOODWIN, District judge. 1 PER CURIAM: 1 These consolidated appeals challenge the Tax Court's decision that a law partnership on a cash basis may not deduct as ordinary and necessary business expenses the various litigation costs advanced for clients on contingent-feecases in which the advances are to be repaid from the amount recovered for the client. The opinion of the Tax Court is reported at 53 T.C. 217 (1970). 2 The Tax Court held that the advances were in the nature of loans, citing Burnett v. Commissioner of Internal Revenue, 356 F.2d 755 (5th Cir. 1966), cert. den. 385 U.S.…