## Facts

- Ruth K. Wild divorced in 1960 after marital litigation that resulted in a decree incorporating a written stipulation addressing custody, support, and property matters.
- For 1960, Wild reported $9,850 as taxable alimony received from her former husband.
- Wild paid $6,000 in attorney’s fees connected to negotiations and court proceedings and claimed the full amount as a deduction.
- The Commissioner disallowed the deduction and determined a $1,541.90 income tax deficiency, asserting the fees were not shown to be ordinary and necessary expenses closely related to producing taxable income under IRC § 212.
- The parties stipulated that some portion of the legal fees was allocable to obtaining alimony includable in Wild’s gross income.
- The case was submitted to the Tax Court on stipulated facts.

## Issues

1. Whether legal fees paid in divorce-related proceedings, to the extent allocable to obtaining alimony includable in the recipient’s gross income, are deductible under IRC § 212(1) as expenses for the production or collection of income.
2. Whether such fees are instead nondeductible personal, living, or family expenses under IRC § 262.

## Decision

- The Tax Court held that amounts paid by a wife to her attorneys, allocable to obtaining alimony includable in her gross income, are deductible under IRC § 212(1).
- The court rejected the Commissioner’s position that divorce-related legal fees are categorically personal and nondeductible.
- The court required allocation: only the portion of fees tied to securing taxable alimony was deductible; portions attributable to other divorce matters remained nondeductible.

## Legal Principles

- IRC § 212(1) permits a deduction for ordinary and necessary nonbusiness expenses paid for the production or collection of income, including taxable alimony.
- IRC § 262 disallows deductions for personal, living, or family expenses; divorce-related fees are generally personal unless a separable portion is directly connected to producing taxable income.
- The “origin of the claim” approach does not bar deduction of an identifiable, income-producing component of divorce legal fees where the expense is incurred to obtain a stream of taxable income.
- Taxpayers must substantiate and reasonably allocate mixed-purpose legal fees between deductible income-production services and nondeductible personal services.

## Conclusion

The Tax Court allowed Wild to deduct, under IRC § 212(1), the portion of her divorce-related attorney’s fees that was properly allocable to obtaining alimony includable in her gross income, while treating the remaining divorce-related legal costs as nondeductible personal expenses under IRC § 262.


Wild v. Commissioner, 42 T.C. 706 (1964)