Grant v. Commissioner

*810 Respondent determined deficiencies in Federal individual income taxes and additions to tax under section 6653(a)¹ as follows:

*86 After concessions by both parties, the issues for decision ³ are as follows:

(1) Whether the value of uncompensated legal services performed by petitioner for charitable, governmental, religious, and educational organizations is deductible under section 170;

(2) Whether the value of services performed by petitioner in a divorce proceeding, in excess of the compensation received by petitioner, is deductible as a business expense under section 162;

(3) Whether payments made by petitioner to his wife during 1972 and 1973 are deductible under section 215;

(4) Whether expenses incurred by petitioner in connection with his former residence are deductible under section 212; and

(5) Whether petitioner is liable for an addition to tax under section 6653(a) for each of the years in issue.

FINDINGS OF FACT

Some of the facts have been stipulated; the stipulations and the stipulated exhibits are incorporated herein by this reference.

When the petition was filed in the instant case, petitioner resided in Oakland, Maryland. *87 For 1972 through 1974, petitioner was a cash basis taxpayer.

Petitioner is a Maryland attorney and during the years involved was engaged in private practice in Oakland.

Petitioner served as attorney to the mayor and town council of Oakland (hereinafter sometimes referred to as the Oakland government), and received $ 5,342.01, $ 1,571.10, and $ 4,670.00 as compensation for legal services performed in 1972, 1973, and 1974, respectively. These amounts were reported as income on the appropriate years' tax returns. During these 3 years, petitioner also performed legal services for the Oakland government for which he was not compensated. Petitioner did not report the value of these uncompensated legal services as income for 1972, 1973, or 1974. On the Schedule C's of his tax returns for 1972, 1973, and 1974, petitioner deducted $ 3,042, $ 1,440, and $ 1,800, respectively, for "Municipal Work"; these amounts represent the value of the time he spent performing uncompensated legal services for the Oakland government. These uncompensated legal services were performed exclusively for public purposes. Respondent disallowed the deductions on account of the uncompensated legal *88 services.

By appointment of the Governor of Maryland, during 1972 and 1973, petitioner served on the Board of Visitors of Frostburg State College. Furthermore, during 1973, by designation of the Secretary of Natural Resources of Maryland, petitioner served on the Advisory Committee of the Ohio River Basin Commission. During 1972 and 1973, petitioner performed services for various governmental, charitable, educational, and religious organizations for which he was not compensated. Petitioner did not include the value of these services as income for these years. On his tax returns for 1972 and 1973, petitioner deducted $ 1,126 and $ 3,478, respectively, as charitable contribution deductions; these amounts represent the value of the time he spent performing uncompensated legal services for these organizations. All of the organizations for which petitioner performed these uncompensated legal services were eligible to receive deductible charitable contributions under section 170. *89 These uncompensated legal services that were performed for governmental bodies were performed exclusively for public purposes. Respondent disallowed the deductions on account of the uncompensated legal services.

*812 In March 1971, petitioner agreed to serve as court-appointed counsel for a client of the Mental Health Section of the Garrett County Department of Health ⁴ in connection with a divorce proceeding instituted against the client under the then-new no-fault divorce law of Maryland. Petitioner's legal services in that divorce case involved more than 440 hours over about 3 years and included three trials in Prince George's County and several appeals. On his tax return for 1974, petitioner claimed a business bad debt deduction for $ 12,054.36 -- the amount by which (a) the sum of (1) the fair market value of his legal services ($ 13,332) and (2) his out-of-pocket expenses ($ 704.67) exceeded (b) the $ 1,982.31 he received for that divorce case. Respondent disallowed this bad debt deduction.

On April 4, 1972, petitioner and his wife, Lucille, separated. After their separation, petitioner's divorce counsel advised Lucille's *90 divorce counsel in a letter dated May 30, 1972, that petitioner would provide Lucille with direct support payments. ⁵ In a letter to petitioner dated June 8, 1972, petitioner's divorce counsel states that he would like to establish with the judge in the divorce action the amount of cash support that petitioner would provide to Lucille. ⁶

By a letter dated August 18, 1972, Lucille's counsel advised petitioner's counsel that Lucille was receiving $ 125 per week ⁷ and objected to the inadequacy of this amount. During 1972, petitioner made 27 weekly $ 125 support payments to Lucille, totaling $ 3,375. Petitioner paid Lucille another $ 125 on January 23, 1973. No support payments were made between January 23, 1973, and May 29, 1973, because Lucille went to California. She returned sometime in April 1973. The *91 court *813 then awarded her alimony pendente lite in the amount of $ 200 per month.

During the period May 29, 1973, through July 28, 1973, petitioner made payments to Lucille totaling $ 700. ⁸

On July 16, 1973, petitioner and Lucille were divorced a mensa et thoro by order of the Circuit Court for Garrett County, Maryland.

In July 1974, there was a hearing on the divorce a vinculo matrimonii. The final divorce decree was enrolled in 1975.

No written separation agreement was entered into between petitioner and Lucille. The $ 3,375 that petitioner paid in 1972 and the $ 125 that petitioner paid on January 23, 1973, were not paid under a written separation instrument.

On April 4, 1972, petitioner vacated a house in Oakland, which was owned jointly by petitioner and Lucille. *92 This house had been theretofore used as a residence by both petitioner and Lucille. Lucille remained on the premises and in September 1972 she rented the lower part of the house to a tenant.

The tenant paid the rent directly to Lucille, who kept the rent. The expenses incurred to maintain the premises were paid by Lucille or the tenant. Petitioner did not include in income any rental income from the house for any of the years in question. Petitioner was not aware of the rental details and did not have any idea of the amount of rent collected by Lucille. In January 1973, Lucille vacated the premises, and the tenant remained in possession of the house.

In July 1974, there was a hearing on petitioner's and Lucille's final divorce decree. Sometime between July and December 1974, the tenant also vacated the premises. Since neither Lucille nor the tenant maintained the premises after the tenant departed, petitioner began paying the maintenance expenses for the house because he feared the insurance would be canceled and the utility services terminated. Petitioner intended to sell the house as soon as the divorce proceeding was concluded.

*814 On his 1974 tax return, petitioner deducted the *93 expenses shown in table 1, which he paid in connected with the upkeep and maintenance of the house.

In 1975, shortly after the final divorce decree was enrolled, the house was sold at a partition proceeding by the Circuit Court for Garrett County. The sale resulted in a capital gain which was reported on petitioner's 1975 tax return.

Petitioner abandoned his personal use of the house before he paid the expenses listed in table 1. Petitioner did not hold the house for the production of income when he paid these expenses.

Negligence, Etc.

Petitioner, who prepared his own tax returns for the years in issue, was aware that section 1.170A-1(g), Income Tax Regs., prohibited a charitable contribution deduction for a contribution of services; he deliberately disregarded the regulation, because he believed that it was invalid.

OPINION

In general, petitioner is entitled to deduct, for any year, any contribution or gift to or for the use of any of certain types of organizations, if payment of the contribution or gift is made within that year. Secs. 170(a)(1) and 170(c)*94 (opening flush language). ⁹ The parties agree that petitioner's services were *815 performed for eligible donee organizations (and, in the case of governmental donees, that the services were performed for exclusively public purposes) and also agree as to the value of the services. ¹⁰

Petitioner maintains that he is entitled to deduct under section 170 the value of his uncompensated legal *95 services to the Oakland government for 1972, 1973, and 1974 (originally deducted as business expenses) and the value of his uncompensated legal services in 1972 and 1973 to other organizations eligible to receive charitable contributions. He contends that section 1.170A-1(g), Income Tax Regs., prohibiting such deductions is invalid. Alternatively, petitioner argues that (1) his services coalesced in the various legal documents he delivered to the charitable organizations which constitute a deductible contribution of property under section 170, and (2) the value of petitioner's services are determinable on the record in the instant case and therefore general difficulties in valuation do not constitute a good reason for refusing to allow the specific deductions here in dispute.

Respondent maintains that the regulation is valid. He contends that a longstanding regulation which applies to a subsequently reenacted statute is treated as having received congressional approval and has the effect of law. Respondent further argues that even if petitioner's services are treated as having coalesced in a physical product, petitioner still is not entitled to a charitable contribution deduction, *96 because of the effect of section 170(e)(1)(A).

We agree with respondent.

Section 1.170A-1(g), Income Tax Regs., ^11*97 prohibits a charitable contribution deduction for a contribution of services. See Cupler v. Commissioner, 64 T.C. 946, 954 (1975). The disputed deductions are for the value of petitioner's uncompensated legal services.¹²

We conclude that, under section 1.170A-1(g), Income Tax Regs., petitioner is not entitled to the disputed deductions.

Petitioner contends that "the value of his services would have coalesced also with the petitioner's output of deeds, opinion letters, reports, legislative drafts, pleadings, resolutions, and ordinances, etc., delivered to the various charitable recipients." Petitioner points to conceptual difficulties in drawing a line separating property from services. To this we make three responses.

Firstly, we acknowledge that such conceptual difficulties exist. See Holmes v. Commissioner, 57 T.C. 430, 437 (1971). However we do not believe it is difficult to determine that what petitioner produced is on the services side of the property-services line. ¹³ We do not believe that the deeds, opinion letters, etc., prepared by petitioner fall on the same side of the line as the original music manuscripts dealt with in Jarre v. Commissioner, 64 T.C. 183 (1975); *98 the cataract machine and heart-lung machine dealt with in Cupler v. Commissioner, supra; the original cartoons and manuscripts dealt with in Mauldin v. Commissioner, 60 T.C. 749 (1973); or the movie films dealt with in Holmes v. Commissioner, supra -- a sampling of the cases petitioner cites in support of his argument. Of the cases cited by petitioner, Goss v. Commissioner, 59 T.C. 594*817 (1973), is the only one that approaches closely the property-services line. Goss made a gift of two specific essays to a qualified donee organization. The essays were based on the results of a survey that Goss conducted. We noted that Goss "maintained physical ownership over the property before it was donated" to the organization. 59 T.C. at 596. In contrast, the record in the instant case does not specify the particular documents transferred to the donee organizations, nor is there any evidence that petitioner ever maintained physical ownership over the documents he refers to. ¹⁴ We do not deny that there are many occasions when a lawyer's documents may have historic value ¹⁵ or perhaps a fair market value resulting from interest by collectors. However, nothing in the record in the instant case *99 would support a finding that any of the documents drafted by petitioner falls into either of the foregoing categories.

Secondly, on his tax returns for each of the years in issue, petitioner described the "product" of his business activity as "Legal Services", *100 and not as documents. We have no reason to believe that petitioner's charitable legal work resulted in a different "product" from that of his business legal work. Also, the stipulations speak of petitioner performing uncompensated "services" or "legal services" for the donee organizations; the stipulations do not speak of contributing documents to the organizations.

Thirdly, even if petitioner could properly be said to have contributed property, rather than services, then section 170(e)¹⁶ as modified by the Tax Reform Act of 1969, would *818 appear to eliminate any deduction by petitioner. (See note 14 supra.)

We conclude that petitioner's uncompensated legal *101 services did not coalesce in property that was the subject of charitable contributions. We conclude that the charitable contributions in dispute were contributions of services, within the meaning of section 1.170A-1(g), Income Tax Regs.

We hold for respondent on this issue.

The Supreme Court, in Commissioner v. Portland Cement Co. of Utah, 450 U.S. 156, 169 (1981), provided the following instructions for testing the validity of a regulation:

regulations command our respect, for Congress has delegated to the Secretary of the Treasury, not to this Court, the task "of administering the tax laws of the Nation." United States v. Cartwright, 411 U.S. 546, 550 (1973); accord, United States v. Correll, 389 U.S. 299, 307 (1967); see 26 U.S.C. § 7805(a). We therefore must defer to Treasury Regulations that "implement the congressional mandate in some reasonable manner." United States v. Correll, supra, at 307; accord, National Muffler Dealers Assn. v. United States, 440 U.S. 472, 476-477 (1979). To put the same principle conversely, Treasury Regulations "must be sustained unless unreasonable and plainly inconsistent with the revenue statutes." Commissioner v. South Texas Lumber Co., 333 U.S. 496, 501 (1948); *102 accord, Fulman v. United States, 434 U.S. 528, 533 (1978); Bingler v. Johnson, 394 U.S. 741, 749-751 (1969). * * *

In analyzing the regulation, it may be helpful to consider the following hypothetical. Physician A works without compensation for 1 day at a charitable hospital's clinic. These services are valued at $ 500. Physician B works for 1 day at his or her usual practice, and contributes the day's net fees (also $ 500) to the same hospital; the hospital uses that contribution to hire physician C to work for 1 day at its clinic. As an economic matter, A and B are even on the day's work. The hospital has had the benefits of a day's work from each of them (directly from A, indirectly from B). Yet, petitioner would have us declare that A is entitled to reduce his or her other taxable income by $ 500 (since A's services for the hospital do not generate any taxable income for A) while B is in effect permitted only to offset the $ 500 of net fees received. We may assume that the Congress has the constitutional power to make this distinction, favoring the services contributor over the cash contributor. However, we do not find anything in the *819 statute or the legislative history *103 to convince us that the Congress has in fact made this distinction. Respondent's regulation has the effect of giving essentially the same "bottom-line" tax treatment to situations which produce essentially the same "bottom-line" economic results and charitable benefits. Petitioner's approach would require us to invalidate a regulation in order to create vastly different tax results from essentially equivalent sets of facts.

We conclude that respondent's regulation embodies a reasonable interpretation of the statute. Petitioner has not pointed us to any conflict between the statute or the legislative history, on the one hand, and the regulation on the other hand. The regulation meets the Supreme Court's test for validity. See Commissioner v. Portland Cement Co. of Utah, supra;Jewett v. Commissioner, 455 U.S. 305, 318 (1982); Durbin Paper Stock Co. v. Commissioner, 80 T.C. 252 (1983); Friedman Foundation, Inc. v. Commissioner, 71 T.C. 40 (1978). Compare Commissioner v. Engle, 464 U.S. 206, 224-225 (1984), with Bob Jones University v. United States, 461 U.S. 574, 596-597 (1983), as to the deference due to proposed regulations, and the deference due to long-standing administrative *104 interpretations. ¹⁷

We hold for respondent on this issue.

Petitioner maintains that the value of his legal services rendered in the divorce proceeding for which he received no compensation is deductible as a business expense under section 162, since the resultant publicity helped his law practice and services were performed for this purpose. ¹⁸ He argues that performance of assigned pro bono publico work, *105 *820 such as the divorce proceeding, is a requirement of his trade or business, and so he is entitled to deduct the fair market value of his services in performing this work. Also, he maintains that section 162(b) is the specific statutory authority for the claimed deduction. Respondent argues that section 162 provides no ground for allowing a deduction for the value of personal services rendered.

We agree with respondent.

Deductions are allowed under section 162(a)¹⁹ for the taxpayer's ordinary and necessary trade or business expenses. In the instant case, petitioner deducted $ 12,054.36 as the uncompensated value of his services rendered in the divorce proceeding. Since the expenditure of petitioner's labor does not constitute petitioner's payment ²⁰ of a deductible business expense (e.g., Maniscalco v. Commissioner, 632 F.2d 6 (6th Cir. 1980), affg. a Memorandum *106 Opinion of this Court; ²¹Rink v. Commissioner, 51 T.C. 746, 753 (1969)), petitioner is not allowed a deduction under section 162(a).

Petitioner's reliance on section 162(b)²² and on our opinion in Marquis v. Commissioner, 49 T.C. 695 (1968), is misplaced. Firstly, the deduction he claims for the value of his services in the divorce case is not allowable under section 162(a), without regard to section 162(b); section 162(b), by its very words, is a disallowance provision (as we put it in Marquis, 49 T.C. at 698-701, section 162(b) is a "limitation" on section 162(a)), and so it cannot operate to revive a deduction that fails the test of section 162(a). Secondly, the deductions claimed, and upheld, in Marquis were for the amounts of the "cash disbursements" (49 T.C. at 697) made by the taxpayer therein; *107 in contrast, petitioner seeks deductions herein for the value of his services.

We hold for respondent on this issue. ²³

Petitioner contends that he is entitled to deduct his payments to Lucille, made in 1972 and through January *108 23, 1973, as alimony because the amounts were paid pursuant to a written separation agreement. Alternatively, petitioner maintains that he made these payments pursuant to a legal obligation incurred by him under a written instrument incident to the divorce. Respondent maintains that since (1) none of the payments was made pursuant to a court order or decree of support and (2) no written separation agreement existed for the period in question, it follows that no alimony deduction is allowable.

We agree with respondent.

Section 215(a)^24*109 provides a deduction for amounts paid by a taxpayer to a former spouse if the former spouse is required to include these amounts in gross income under section 71. Under section 71(a), ^25*110 the former spouse's gross income includes *822 periodic payments received from the taxpayer (1) under a decree of divorce or separate maintenance, (2) under a written separation agreement, or (3) under a decree for support; in order for petitioner to succeed, he must show that the payments in dispute fall into one of these three categories.

Section 71(a)(1) applies to payments "received after" a decree of divorce or of separate maintenance. Respondent's concession (see note 8 supra), leaves in dispute only those payments made by petitioner *111 to Lucille up to January 23, 1973. The Circuit Court's decree awarding alimony pendente lite was not made until after that date, according to petitioner's testimony. The Circuit Court's decree of divorce, a mensa et thoro was not made until July 16, 1973. It appears, then, that none of the payments here in dispute was made after a decree of divorce or separate maintenance. Accordingly, none of the payments here in dispute qualifies for inclusion in Lucille's income under section 71(a)(1). It follows that none of the payments here in dispute is deductible by petitioner under section 215(a).

There is no evidence that any one of the payments here in dispute was made under a support decree. Accordingly, the amounts of these payments are not includable in Lucille's income under section 71(a)(3), and are not deductible by petitioner under section 215(a).

In order to qualify under section 71(a)(2), the payments in dispute must be shown to have been made by petitioner to Lucille under a written separation agreement. The parties have stipulated that "No written separation agreement was entered into between the petitioner and his wife." Evidently, the parties do not regard their stipulation *112 as having foreclosed the question of whether three letters constitute, in the aggregate, a written separation agreement sufficient to satisfy this requirement of the statute.

*823 Petitioner offered into evidence three letters (see notes 5, 6, & 7 supra), which, he contends, when viewed in the aggregate constitute a written separation agreement. The three letters fail to satisfy the requirements of the statute, which (1) requires that there be "a written separation agreement" and (2) applies to "periodic payments * * * received after such agreement is executed which are made under such agreement".

Firstly, the only writing executed on Lucille's behalf -- the August 18, 1972, letter (note 7 supra) -- is a complaint about the inadequacy of the rate of payment and not an agreement to the rate of payment. Thus, the record in the instant case does not include any writing (or set of writings) that constitutes an agreement between Lucille and petitioner. Estate of Hill v. Commissioner, 59 T.C. 846, 856-857 (1973). An oral agreement is insufficient. See Gordon v. Commissioner, 70 T.C. 525, 529 (1978), interpreting similar language in section 71(a)(1). In Prince v. Commissioner, 66 T.C. 1058 (1976), *113 attorneys for the husband and wife reached an agreement in the course of a divorce trial and recited that agreement into that divorce case's record as their joint stipulation. We concluded that the certified transcript of that stipulation constituted a written agreement. The record in the instant case falls far short of showing such a written agreement. The most that can be said about the three letters is that they are evidence of a course of action; petitioner determined that he ought to make payments of $ 125 per week to Lucille, and he made these payments for 28 weeks.

Secondly, the course of weekly payments must have begun no later than June 1972. The August 18, 1972, letter refers to such payments already having been made. Payments made before the written agreement was executed are not eligible for treatment under section 71(a)(2). Even if a written agreement ultimately was executed, nothing in the record would permit us to reach a conclusion that any of petitioner's disputed payments to Lucille were made after any such agreement was executed. See Gordon v. Commissioner, 70 T.C. at 530.

We conclude, and we have found, that petitioner's disputed payments to Lucille were not *114 paid under a written separation agreement.

*824 Petitioner relies on a statement in Lerner v. Commissioner, 195 F.2d 296, 298 (2d Cir. 1952), revg. 15 T.C. 379 (1950), in which the Court of Appeals for the Second Circuit interpreted the statutory phrase "written instrument incident to such divorce". The instrument in Lerner was an agreement between Lerner and his wife describing in great detail the rate of the payments, the purpose of the payments, and even the mechanical procedure of the payments. The dispute resolved by the Court of Appeals was whether the written instrument was incident to the divorce, not whether there was a written instrument.

Petitioner also relies on our opinion in Cramer v. Commissioner, 36 T.C. 1136 (1961), citing Lerner with approval. In Cramer we found that there was a specific instrument that was negotiated, revised, and executed by Cramer and her husband. In Cramer, also, the question presented was whether the written instrument was incident to the divorce, not whether there was a written instrument.

Both Cramer and Lerner are distinguishable from the instant case, as to the factual setting and also as to the legal issue that those opinions analyze.

We hold *115 for respondent on this issue.

Petitioner contends that he is entitled to deduct his maintenance expenses for the house under section 212 because he held the house for the production of income. He maintains that the jointly owned house was converted by his wife to rental property when she vacated the premises in January 1973 and the property remained rented to a tenant. Therefore, petitioner argues, although the tenant vacated the premises sometime after June 1974, petitioner never converted the property back to a personal residence and he assumed the maintenance of property held for the production of income.

Respondent agrees that, if we were to conclude that petitioner held the house for the production of income, then petitioner would be entitled to a deduction for the maintenance expenses. However, respondent argues, since petitioner neither received any income from the rental property nor entered into any of the business arrangements, the house had never been converted to rental property for petitioner's tax purposes. Also, *825 respondent contends that petitioner did not maintain the house for postconversion appreciation purposes and, therefore, petitioner is *116 not entitled to deduct the maintenance expenses of the property.

We agree with respondent.

Under section 212(2),

there shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year --

* * * *

(2) for the management, conservation, or maintenance of property held for the production of income; * * *

Whether an individual holds property for the production of income is a question of fact, and depends on the purpose or intention of the individual, as gleaned from all of the facts and circumstances of the particular case. Several factors are to be considered in determining this intention. Where the property is the individual's residence, these factors include (1) the length of time the house was occupied by the individual as his residence before placing it on the market for sale; (2) whether the individual permanently abandoned all further personal use of the house; (3) the character of the property (recreational or otherwise); (4) offers to rent; and (5) offers to sell. In addition, if the individual offers his house only for sale, then in order to be treated as holding the property for the production of income he must intend to realize gain *117 representing postconversion appreciation in the fair market value of the property. Meredith v. Commissioner, 65 T.C. 34, 41-42 (1975), and cases cited therein.

The burden of proof is on petitioner (see, e.g., Welch v. Helvering, 290 U.S. 111, 115 (1933); Meredith v. Commissioner, 65 T.C. at 41; Rule 142(a), Tax Court Rules of Practice and Procedure) to show that he held the house for the production of income.

When petitioner vacated the premises, in April 1972, the house was left for Lucille's use, at least for the time being. (For circumstances under which petitioner might have been allowed alimony deductions on account of his expenditures for Lucille's benefit, see J.E. Maule, Taxation of Residence Transactions 437-441 (1985).) Although the evidence is sparse, it *826 seems clear that Lucille was to bear the effect of any expenses and was to be entitled to receive any income to be derived from the house. Petitioner did not include in income any rental income from the house for any of the years in question. There is no basis in the record to attribute to petitioner any of Lucille's activities in renting out the house. ²⁶

As in Meredith*118 (65 T.C. at 40-41), we conclude that petitioner abandoned his personal use of the house before he paid the expenses for which he seeks a deduction. However, during the time petitioner paid these expenses, he held the house only for sale as soon as the divorce proceeding was concluded. In fact, the house was sold in 1975, shortly after the final divorce decree was enrolled. We have no evidence that petitioner held the house for appreciation purposes after he began to assume the burden of maintenance expenses. Thus, as in Meredith, petitioner never converted the property to a section 212(2) purpose. We conclude that petitioner did not hold the house for the production of income when the expenses were paid.

We hold for respondent on this issue.

V. Section 6653(a) -- Negligence, Etc.

An addition to tax under section 6653(a)^27*119 is imposed if any part of any underpayment of tax is due to negligence or intentional disregard of rules or regulations. Petitioner has the burden of proving error in respondent's determinations that this addition to tax should be imposed against him. Bixby v. Commissioner, 58 T.C. 757, 791-792 (1972).

Although the instant case presents many issues, the only one giving rise to respondent's determination of the addition to tax under section 6653(a) is the charitable contributions issue (issue I supra).

*827 In claiming deductions for the fair market value of his services, petitioner intentionally disregarded section 1.170A-1(g), Income Tax Regs., because he believed the regulation to be invalid. *120 We have concluded that his belief was incorrect. We have pointed out (note 14 supra) that a number of the opinions on which he relies -- several of which opinions were issued before petitioner filed some or all of the tax returns for the years in issue -- indicate that section 170(e), as enacted by the Tax Reform Act of 1969, would have eliminated any deduction in petitioner's case even if the regulation was invalid. We conclude that petitioner had no reasonable basis for claiming these deductions in the teeth of both the regulation and the statute. ²⁸

We hold for respondent on this issue.

To take account of respondent's concessions,

Decision will be entered under Rule 155.