Louis A. Mitchell v. Commissioner of Internal Revenue

ROSEN, District Judge.

Petitioner/Appellant Louis A. Mitchell appeals a decision of the United States Tax Court disallowing a deduction of $755,172 which Mitchell had claimed as a business expense on his federal income tax return. This amount was a “restitution” payment made by Mitchell in order to keep stocks which he had obtained in violation of federal banking regulations. The IRS disallowed the claimed deduction finding that the amount paid was not deductible as an ordinary and necessary business expense. The tax court ruled in favor of the IRS, holding that the $755,172 was a capital…