¶1concurring: While concurring in the result reached by the majority in this case, I do not agree that the attorney fee is deductible by any reference whatsoever to the nature (ordinary income or capital) of the amount collected as a result of the services for which the attorney fee was paid. The attorney fee is specifically deductible under section 212(1), it being an ordinary and necessary expense paid during the taxable year for the collection of income. The only question which might be raised with respect to the wording of section 212 is whether the word “income” means ordinary income or capital. The respondent’s regulations dispose of this question in the taxpayer’s favor. See sec. 1.212-1 (b), Income Tax Kegs. The Commissioner there states: “The term ‘income’ for the purpose of section 212 includes not merely income of the taxable year but also income which the taxpayer has realized in a prior taxable year or may realize in subsequent taxable years; and is not confined to recurring income but applies as well to gains from the disposition of property.” It seems well settled, Susan J. Carter, 9 T.C. 364 (1947), affd. 170 F. 2d 911 (C.A. 2, 1948); J. C. Bradford, 22 T.C. 1057 (1954); George J. Lentz, 28 T.C. 1157 (1957); Westover v. Smith, 173 F. 2d 90 (C.A. 9, 1949), that the nature of the collection here made is capital. The 1954 Internal Eevenue Code contains provisions, section 263 through section 273, specifically providing for the nondeductibility of certain items of expense including in section 263 as “capital expenditures.” Yet nowhere therein is the specific allowance of the deductibility of amounts expended for the collection of income limited in any way.
¶2Baum, dissenting: Petitioner received $108,000 which is regarded herein as part of the proceeds received by him in exchange for his Argosy stock, resulting in the receipt of capital gain. In order to obtain such proceeds petitioner incurred expenses in the amount of $6,760. The proper tax treatment of these expenses is indicated by Spreckels v. Commissioner, 815 U.S. 626, which held that commissions paid in connection with the sale of securities are not deductible as expenses but are to be treated merely as reducing the sales price. Such commissions, although ordinarily of the type that would qualify under the statute as deductible expenses, are in substance a charge or offset against the proceeds and therefore operate merely to shrink the amount received in the disposition of the securities rather than as a deduction from ordinary income. In essence, that is the Commissioner’s position here, and I think it is sound.
¶3If, for example, the expenses herein were $70,000, we would have the strange result that at most only $54,000 would be reportable as income (one-half of the $108,000 proceeds, by reason of the capital gains provisions) whereas a deduction of $70,000 would be allowable under the Court’s decision. Thus, a transaction actually producing a net profit would appear on the return as a net loss. If such is required by the statute, then, of course, that would be the end of the matter. But I think it is not required, and that Sprechels points the way to the correct answer.