Brief Fact Summary. Petitioner and his wife entered into an antenuptial agreement. The agreement specified that in the event of divorce, Petitioner would pay $5,000 and his wife would release all interests in his property.
Synopsis of Rule of Law. All ordinary and necessary expenses paid or incurred during the taxable year producing or collecting income, or managing, conserving, or maintaining property held for the production of income are deductible.
If the claim could not have existed but for the marriage relationship, the expense of defending it is a personal expense and not deductible.View Full Point of Law
Issue. May Petitioner deduct legal expenses incurred in defending his wife’s lawsuit to set aside their ante-nuptial contract?
Held. Judge Simpson issued the opinion for the Tax Court in holding that Petitioner is not allowed to take the expenses as a deduction.
Discussion. If the claim could not have existed “but for the marriage relationship,” then the expense to defend it is a personal expense and not deductible. Marriage is clearly a personal in nature and defending your property incident to divorce does not fall within the rule.