Hunter v. Commissioner

1966 T.C. Memo. 36, 25 T.C.M. 214, 1966 Tax Ct. Memo LEXIS 245

• Court: United States Tax Court
• Decided: February 23, 1966
• Docket: Docket No. 5691-64.
• Status: Unpublished

Opinion

Leon G. Hunter and Adarene Hunter v. Commissioner.

Hunter v. Commissioner

Docket No. 5691-64.

United States Tax Court

T.C. Memo 1966-36; 1966 Tax Ct. Memo LEXIS 245; 25 T.C.M. (CCH) 214; T.C.M. (RIA) 66036;

February 23, 1966

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Charles J. Chastang, 33 N. High St., Columbus, Ohio, for the petitioners. W. Dean Short, for the respondent.

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MULRONEY

Memorandum Opinion

MULRONEY, Judge: Respondent determined a deficiency in petitioners' income tax for the year 1959 in the amount of $424.68. Leon G. Hunter, who will be called petitioner, is an osteopathic physician who lives in Cincinnati, Ohio. He and his wife Adarene filed their joint income tax return for 1959 with the district director of internal revenue at Cincinnati, Ohio. Petitioner is in the same position as the taxpayer in Glenn L. Heigerick, 45 T.C. 475, (Feb. 23, 1966), in that he was an osteopath who had agreed to pay $5,000 for staff privileges at the Epp Memorial Hospital over a 4-year period. He paid $1,000 on such obligation in the year 1959 and took deduction on his income tax return for that year, which the respondent disallowed.

Petitioner now argues that the $1,000 was an ordinary and necessary business expense under section 162(a), Internal Revenue Code of 1954. The payment secured staff privileges for an indefinite time and it was in effect petitioner's testimony that he anticipated his reappointment each year and he has been reappointed and is still a member of the staff.

Since the payment was made under the same circumstances as the payment that was disallowed in Glenn L. Heigerick, supra, our opinion there will control here. Accordingly, consistent with our opinion in the above cited case, we hold the $1,000 payment in 1959 for staff privilege fees was not an allowable business expense deduction under section 162(a), Internal Revenue Code of 1954.

Here, as in Glenn L. Heigerick, supra, respondent allowed an amortized deduction for said payment based on treating the payment as a capital expenditure.

Decision will be entered for the respondent.