The trade press and blogosphere commented extensively on the Tax Cuts and Jobs Act of 2017. The increased personal exemptions and enhanced standard deduction were welcomed, but fewer spotlights were shone on the suspension of the employee unreimbursed business expense deduction and the Section 212 expenses for production of income deduction.

While these latter impacted far fewer taxpayers, in the case of Adrienne Mennemeyer, T. C. Memo. 2025-80, filed 7/28/25, the suspension of the Section 212 deduction was potentially ruinous. Adrienne settled a wrongful termination and defamation case in 2018, wound up with a $1.5 million settlement, but had a 33% attorneys’ fee.

There’s the usual joust about Section 104 physical injury, but Adrienne has no documented medicals, and her fact witnesses’ testimony was less than stellar. Judge Courtney D. (“CD”) Jones tosses it all.

Adrienne’s post-employment business venture fares little better. Her accountant boyfriend just copied whatever numbers Adrienne gave him. Section 274 knocks out her Chevvy Suburban purchase and expenses, and she hasn’t enough paper to get Cohan treatment above what IRS ultimately allows on everything else.

But however devastating leaving out half of the net recovery on her 1040, plus her unreported business income and disallowed deductions, getting taxed on her attorneys’ fees would have been a crusher.

Except.

Adrienne’s trusty attorney raised the Section 62 deduction for attorneys’ fees in civil rights and discrimination cases as an alternative argument.

“Respondent did not address Ms. Mennemeyer’s alternative position and therefore has waived the argument. See Rose v. Commissioner, T.C. Memo. 2019-73, at *35–36. Moreover, we find that Ms. Mennemeyer’s claims against PNC fall within the broad category set forth in section 62(e)(18)(ii). Specifically, Ms. Mennemeyer’s claims against PNC related to her employment relationship with PNC and her claim for lost wages. Accordingly, the parties shall consider section 62(a)(20) when they recalculate the deficiency under Rule 155. See Dern v. Commissioner, T.C. Memo. 2022-90, at *3 n.3 (noting that the Commissioner conceded that the taxpayer was entitled to deduct attorney’s fees and court costs in connection with claim against former employer).” T. C. Memo. 2025-80, at p. 12.

For the Rose story, see my blogpost “A Little Tin Box,” 6/13/19; for Dern, see my blogpost “Hurt But No Foul,” 8/30/22.

While you can’t count on IRS blowing this one again, definitely raise Section 62 wherever you see a glimmer of hope. And maybe the Big Beautiful Whatever will solve the problem.