United States v. Gilmore (1962)
- Docket
- 21
- Decided
- 1962-01-01
- Category
- General
Summary
Question: Does the origin and character of a claim control the basic test of whether the expense was "business" or "personal" and therefore whether it is deductible? Conclusion: Yes. Justice John Marshall Harlan delivered the opinion of the 7-2 majority. The Court held that the origin and character of a claim with respect to expense incurred, rather than its potential consequences for the taxpayer, controls the basic test of whether an expense is classified as business or personal; therefore legal expenses are deductible as expenses incurred for conservation of property held for production of income. Dixie Gilmore's claims stemmed from the marital relationship and not from income-producing activity; therefore the claims in this case were personal, rather than business, expenses. In their dissenting opinion, Justice Hugo L. Black and Justice William O. Douglas wrote that the majority opinion based its analysis on an unjustly narrow interpretation of the Internal Revenue Code. They argued that the legal expenses in this specific case should be considered business expenses.