R. Fenley Hunter v. United States

219 F.2d 69, 46 A.F.T.R. (P-H) 1649, 1955 U.S. App. LEXIS 5225

Opinion

219 F.2d 69

55-1 USTC P 9380

R. Fenley HUNTER, Appellant,
v.
UNITED STATES of America, Appellee.

No. 132, Docket 23125.

United States Court of Appeals, Second Circuit.

Argued Jan. 11, 1955.
Decided Feb. 3, 1955.

Gerdes & Montgomery, John Gerdes and Winthrop A. Short, New York City, for appellant.

H. Brian Holland, Ellis N. Slack, John J. Kelley, Jr., Washington, D.C., Leonard P. Moore, Brooklyn, N.Y. (Elliott Kahaner, Brooklyn, N.Y., of counsel), for appellee.

Before CLARK, Chief Judge, and FRANK and HINCKS, Circuit Judges.

FRANK, Circuit Judge.

Taxpayer contends that the attorney's fees are deductible under Section 23(a) (2) of the Internal Revenue Code, 26 U.S.C.A. 23(a)(2), as 'ordinary and necessary expenses * * * for the production * * * of income * * *.' He argues that, as the settlement reduced the amount of his liability for alimony and thus increased his taxable net income, it constituted the 'production of income.' We cannot agree. We think the 'production' of income means the creation of increased gross income, not a reduction of liabilities or an increase of net taxable income by a reduction of allowable deductions in computing net income. Lykes v. United States, 343 U.S. 118, 72 S.Ct. 585, 96 L.Ed. 791; Howard v. Commissioner, 9 Cir., 202 F.2d 28.

Affirmed.