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I.R.C. § 162(a) allows a deduction for all the ordinary and necessary expenses of carrying on a trade or business. In order for the expense to be deductible by a taxpayer, it must be an ordinary expense, it must be a necessary expense, and it must be an expense of carrying on the taxpayer's trade or business. If any one of these requirements is not met, the expense is not deductible under § 162(a).
The artist was a visiting artist and lecturer. He had a history of hospitalizations for mental and emotional disturbances and was under psychiatric care. Shortly after boarding the plane for a one-week trip to teach at an art academy, he took a medication that his doctor had prescribed for anxiety. He had never taken that drug before. While on the plane, he began to act irrationally and he attacked another passenger. He was indicted on federal charges. He deducted the legal expenses he incurred in defending the criminal charges and in settling the civil action brought by the passenger.
Were the expenses deductible as a business expense under § 162?
The court held that the expenses were not deductible as a business expense under § 162 because the incident was not ordinary for noted artists and teachers of art. The travel was not itself a cost of his transportation, the expenses were not strictly a cost of travel, and neither the altercation nor the expenses were undertaken in furtherance of the artist's trade or business.