dissenting: Since the state statute prohibits this agreement, the fines and punishments must be taken as contemplated by it, Armour Packing Co. v. United States, 209 U. S. 56; Northern Pacific Ry. v. Wall, 241 U. S. 87; and if the agreement itself and its performance may be regarded as ordinary and necessary incidents of petitioner’s business, the costs of its performance and expenses *104resulting from it are among the expenses of the business. If agreements such as this were not unlawful, as would be true in Delaware and perhaps other states, the expenses which they involve would be among those ordinary and necessary business expenses which serve to reduce income. See Independent Brewing Co., 4 B. T. A. 870; California Brewing Association, 5 B. T. A. 347; Richmond Hosiery Mills, 6 B. T. A. 1247; H. A. Allen, 7 B. T. A. 1256; George Ringler & Co., 10 B. T. A. 1134; George M. Cohan, 11 B. T. A. 734; Sam Harris, 11 B. T. A. 871; G. C. M. 1627, VI C. B. 61.
The expenses of defending a civil suit growing directly out of a taxpayer’s business, such as by a partner for accounting, by a patient of a physician for alleged malpractice, by an injured person for damages, or by an alleged patentee for damages for infringement, have been held by the United States Supreme Court to be deductible in Kornhauser v. United States, 276 U. S. 145.
Thus it develops that the crucial question is whether the expenses here are deprived of deductibility because they were brought about by business conduct which the State of New York declares to be a crime. If so, it seems to me it must be by reading a qualification into the taxing statute by implication, since the explicit language is not restricted and makes no distinction between expenses growing out of crime and those which do not. When we seek for a reason to restrict the deductions, it seems to rest in the idea that an outlawed act can not involve an ordinary and necessary expense — that it is incongruous and repulsive to regard it as a business incident, and that such an argument should not be entertained. Essentially, the idea is that the express statutory deduction is narrowed by an assumed public policy to exclude such expenses. This Board has in several cases applied that view by saying that, as to individuals the expense was “ personal ” and hence expressly deprived of deduction by section 215, or that it was not proximately related to the business, or that it was not ordinary and necessary.1 But none of these things can be said of these expenses. They were corporate and not personal, were directly related to the business and were no doubt substantially responsible for profit, and unless we are to adopt an esoteric significance for words of common speech, they were ordinary and necessary to the business of earning such profits. I am not apprised of any overwhelming Federal public policy which takes them from the statutory category of deductions applied in determining net income and I have no reluctance in saying, as the facts *105sufficiently show, that it was ordinary for this petitioner to violate the statute or incur the fine in order to carry on its business. We can not ignore the fact, no matter how heartily we may disapprove it.
The revenue act was not contrived as an arm of the law to enforce State criminal statutes by augmenting the punishment which the State inflicts. In some instances, where Congress sought to use a taxing act to accomplish a nontaxing purpose, the attempt has failed. Hill v. Wallace, 259 U. S. 44; Bailey v. Drexel Furniture Co., 259 U. S. 20. Cf. Lipke v. Lederer, 259 U. S. 557. And there is added reason for such a rule in respect of a local statute growing out of the economic policy of a State.
The statute was expressly designed to tax net income, irrespective of source. This has been held to permit a tax on income from prohibited occupations, United States v. Yuginovich,, 256 U. S. 450; United States v. Stafoff, 260 U. S. 477; United States v. Sullivan, 274 U. S. 259. While it is true that in the Sullivan case the court intimates a question as to the deductibility of bribes,* this falls short of authorizing a construction of the statute by which the tax would fall on something in excess of the net income expressly defined as the object of the levy. It is not necessary to consider whether Congress, had it so chosen, might have excluded these expenses from deductions, or imposed the tax upon a specially defined net income in respect of businesses founded on unlawful acts. See Steinberg v. United States, 14 Fed. (2d) 564. Sufficient that here Congress did not do so, but taxed only the net income which remained after deducting all ordinary and necessary expenses of carrying on the business. It did not shape its definition of income variously to conform to the different laws of the several States, Burk Waggoner v. Hopkins, 269 U. S. 110; Weiss v. Wiener, 279 U. S. 333; Eagan Estate, 17 B. T. A. 694. In my opinion, the entire amount of $7,510 was deductible.
Makquette agrees with this dissent.Sarah Backer, 1 B. T. A. 214; Norvin R. Lindheim, 2 B. T. A. 229; John Stephens, 2 B. T. A. 724; Columhus Bread Co., 4 B. T. A. 1126; Great Northern Ry. Co., 8 B. T. A. 225; Wolf Manufacturing Co., 10 B. T. A. 1161; George L. Rickard, 12 B. T. A. 836; Atlantic Terra Cotta Co., 13 B. T. A. 1289.