Locke v. Commissioner
United States Tax Court
An action was instituted against the taxpayer under SEC rule 10b-5 to recover damages on account of the sale of certain stock to the taxpayer. Upon inquiry, the taxpayer had advised the seller with respect to the stock. Taxpayer was an "insider" within the scope of rule 10b-5, but was not an officer or director of the corporation, and his stock ownership was nominal.
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An action was instituted against the taxpayer under SEC rule 10b-5 to recover damages on account of the sale of certain stock to the taxpayer. Upon inquiry, the taxpayer had advised the seller with respect to the stock. Taxpayer was an "insider" within the scope of rule 10b-5, but was not an officer or director of the corporation, and his stock ownership was nominal. The taxpayer sought to deduct the resulting legal expenses of his successful defense to the suit as an ordinary and necessary expense under sec. 162. Held: The taxpayer did not give any advice in his capacity as a corporate…
1Opinion of the Court
OPINION
The petitioner seeks to deduct as ordinary and necessary expenses incurred in a trade or business, within the meaning of section 162, legal expenses incurred in defense of an action brought against him under section 78j of title 15 of the United States Code, as implemented by rule 10b-5 of the Securities and Exchange Commission.
Section 78j, title 15, of the United States Code, relating to manipulative and deceptive devices, provides, in part, as follows:
It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or of…
2Cases cited10 opinions
- Woodward v. CommissionerSupreme Court of the United States · 1970
- White v. AbramsCourt of Appeals for the Ninth Circuit · 1974
- Boagni v. CommissionerUnited States Tax Court · 1973
- Anchor Coupling Company, Inc. v. United StatesCourt of Appeals for the Seventh Circuit · 1970
- Blaine M. And Virginia C. Madden v. Commissioner of Internal RevenueCourt of Appeals for the Ninth Circuit · 1975
5 more not listed; retrieve them via the Exa API.
3Cited by10 opinions
- Bradford v. CommissionerUnited States Tax Court · 1978
- Wagner v. CommissionerUnited States Tax Court · 1982
- Barrett v. CommissionerUnited States Tax Court · 1991
- John L. Locke and Irene F. Locke v. Commissioner of Internal RevenueCourt of Appeals for the Ninth Circuit · 1978
- Securities & Exchange Commission v. CarrollDistrict Court, W.D. Kentucky · 2014
5 more not listed; retrieve them via the Exa API.