Angus J. Depinto and Margaret F. Depinto v. United States

Taxpayers Angus and Margaret DePinto appeal from the denial of their claims for refund of certain federal income taxes, interest, and penalty paid for the years 1964, 1965, and 1967. Two issues are presented on appeal: First, whether the Grantor Trust provisions of the Internal Revenue Code, 26 U.S.C. §§ 671 to 678, entitle appellants to include on their personal tax return the income and deductions reported during their bankruptcy by the bankruptcy trustee. Second, whether attorneys’ fees incurred in defense of a suit arising out of Angus De-Pinto’s service as a corporate director constitute a deductible trade or business expense or loss under either section 162(a) or section 165(c)(1) of the Code, 26 U.S.C. §§ 162 (a), 165(c)(1). The district court held the Grant- or Trust provisions were inapplicable and that the attorneys’ fees paid were not deductible. This court has jurisdiction pursuant to 28 U.S.C. § 1291 . We affirm.

I.

Facts.

The complete factual history of this suit spans thirty years and need not be recited here. It is sufficient to recite that in the beginning appellant Angus DePinto served as a corporate director from 1955 to 1957. In 1958 a shareholders’…