*3541 Where an attorney rendered services in connection with the petitioner's personal affairs and also in connection with certain business affairs, and he is not able to allocate his fee between the two classes of services, and where no ground for allocation is shown, the Commissioner's action in denying the entire amount as a deduction from income is approved.
*423 This is a proceeding for the redetermination of deficiencies in income tax. The Commissioner notified the petitioner of deficiencies in tax for the calendar years 1919 and 1920, in the respective amounts of $9,393.04 and $46,234.25. The petitioner alleged that improper rates of depreciation were used in the computation of his tax liability for these years, and that for the year 1920, the Commissioner erred in disallowing a deduction of $14,500 as attorney's fees.
*424 FINDINGS OF FACT.
The petitioner is an individual residing in Washington, D.C., who had business interests in Indianapolis, Ind.
He kept his books and made his returns upon a cash receipts and disbursements basis.
*3542 In 1920 he paid $15,000 to J. W. Noel, an attorney of Indianapolis, as a fee for legal services. On his income-tax return for the year 1920, he claimed a deduction of $15,000 as an ordinary and necessary expense on account of the payment of the fee to Noel. During 1919 and 1920, Noel rendered legal services to the petitioner in connection with certain of the petitioner's business enterprises. In addition, he rendered legal services to the petitioner in connection with a divorce action against the petitioner. The petitioner was having certain domestic difficulties with his wife and family, including his sons-in-law. Noel also rendered legal services to the petitioner in connection with his domestic difficulties entirely separate from his services in connection with the divorce proceedings. These separate services had to do with a division of petitioner's property between the petitioner and his wife in furtherance of a settlement of their domestic difficulties. For all of the services above mentioned, Noel rendered a bill for $20,000 in July, 1920. The petitioner paid $15,000 of this amount in 1920, and paid $5,000 in a later year. Noel was called as a witness and stated*3543 that $500 was an ample charge for his services rendered the petitioner in connection with the divorce proceedings. He was not able to make any further allocation of the charges included in his bill.
During all of the year 1919, and until June 10, 1920, the petitioner was the owner of three office buildings in the City of Indianapolis, Ind. The parties have agreed that for the purpose of a deduction under section 214(a)(8) of the Revenue Act of 1918, the following rates are proper for the buildings as indicated:
| Per cent | |
| Meridian Life Building | 2 1/2 |
| Maryland and Delaware Streets property | 3 |
| New Jersey and Market Streets property | 3 |
The Commissioner for the year 1919, used 2 per cent as the proper rate for the Meridian Life Building and 3 per cent as the proper rate for the other two properties. In his determination of the deficiency for the year 1920, he did not allow any depreciation on these buildings.
OPINION.
MURDOCK: The petitioner contends that of the $15,000 which he paid to Noel in 1920, he is entitled to deduct $14,500 under section *425 214(a)(1) of the Revenue Act of 1918, as an ordinary and necessary expense of carrying on a trade*3544 or business. Part of the services for which the attorney made this charge had to do with certain business enterprises of the petitioner. However, the attorney also rendered services which had nothing whatever to do with the petitioner's trade or business, but, on the contrary, had to do with his personal family affairs. Amounts paid for services such as these are not deductible as ordinary and necessary expenses of a trade or business. , and . It appears that a considerable portion of the attorney's fee was to compensate the attorney for services of this latter sort. The attorney is now and always has been unable to make an allocation of his fee between the two different kinds of services which he rendered. No method has been suggested whereby we may make such an allocation. Consequently, on this point we must affirm the Commissioner. .
The petitioner has raised no controversy over the valuation of the buildings which he owned in the City of Indianapolis. The parties have agreed upon the rates to be applied to the values of those*3545 buildings for the purpose of computing depreciation deductions for 1919 and for part of 1920, under section 214(a)(8) of the Revenue Act of 1918.
Judgment will be entered under Rule 50.