The Great Dissenter, a/k/a The Judge Who Writes like a Human Being, s/a/k/a The Implacable, Incontrovertible, Irrefragable, Indefatigable, Insuperable, Ineffable, Ineluctable, and Illustrious Foe of the Partitive Genitive, and Old China Hand, Judge Mark V. Holmes, cleans up an unresolved oldie that proves an old adage.

If you owe somebody money, stall. They might forget.

Unhappily, Judge Holmes’ elephantine memory digs through the soil of days gone by, and comes up with James A. Cavanaugh, Jr., Docket No. 30825-09, filed 11/7/16.*

On a day with no decisions and no designated orders, when I just got back from visiting my nearest and dearest in the Bayou City, I find this hangover from what a certain Nobel laureate called “the foggy ruins of time.”

All y’all (remember I’m just back this evening) will remember Big Jim Cavanaugh, Jr., the Clean-up King, his trusty sidekicks Rock Walker and Erica Fortner, and the late Claire (“Colony Anne”) Robinson.

What, no?!

Then read my blogpost “Well-Settled – No Deduction – Part Deux,” 11/27/12.

I thought Big Jim’s attempt to write off his legal fees settling with Mrs. Robinson was long gone, historical.

Wrong! Big Jim moved for reconsideration, and he was timely. Judge Holmes never dealt with the motion.

Well, there isn’t much to deal with. “The deductibility of legal expenses is governed by the same ‘origin of the claim’ test as is the deductibility of the cost of settling the lawsuit in which they arose. Respondent [IRS] had the burden of proof, because he challenged the deductibility of those expenses only in his answer. But he met it by stipulating to the amount of those expenses and that they were incurred because of the lawsuit, and then showing by a preponderance of the evidence that the origin of that lawsuit made the cost of settling it nondeductible.” Order, at p. 2.

Big Jim wanted to deduct the legal fees in settling the case, but as the claim originated in a non-business environment, no deduction for settlement or costs of procuring same.

So, guys, do the Rule 155 beancount.

Better late than never.

Edited to add, 9/6/21: 5 Cir affirmed. Note origin-of-claim vs effect-of-litigation analysis.

*James A Cavanaugh Jr 30825-09 11 7 16