Test

MEMORANDUM **

Eric Test and Dr. Odelia Braun (hereinafter Dr. Braun) appeal the Tax Court’s decision finding a $24,647 deficiency in their 1994 federal income tax. The Tax Court determined that certain legal fees incurred by Dr. Braun were deductible only as unreimbursed employee business expenses; i.e., below-the-line deductions. We affirm.

“The deductibility of legal fees depends on the origin and character of the claim for which the expenses were incurred and whether the claim bears a sufficient nexus to the taxpayer’s business or income-producing activities.” Test v. Comm’r, T.C.M.(RIA) 2000-362 (2000) (citing United States v. Gilmore, 372 U.S. 39 , 83 S.Ct. 623 , 9 L.Ed.2d 570 (1963)) (emphasis added). Indeed, “the origin and character of the claim with respect to which an expense was incurred, rather than its potential consequences upon the fortunes of the taxpayer, is the controlling basic test of whether the expense was ‘business’ or ‘personal’ and hence whether it is deductible or not [as an above-the-line business expense].” Gilmore, 372 U.S. at 49 , 83 S.Ct. 623 (emphasis added). The relevant “claim,” for purposes of applying the “origin of the claim” standard, is the…