Harold Hitz Burton

“ Without the business, there would have been no income. Without he income, there would have been no tax. To say that this expense is not ordinary and necessary is to say that that which gives life is not ordinary and necessary.' Heininger v. Commissioner of Internal Revenue, 7 Cir., 133 F.2d 567, 570.↑ 'We conclude that the payments under the contracts between the two optical businesses, composed of petitioners, and the oculists are not deductible as ordinary and necessary expenses because the contracts under which these payments were made violated public policy.' (Emphasis supplied.) ”

“ For income tax purposes, petitioners treated their payments to the doctors as ordinary and necessary expenses of carrying on business and deducted them from their gross incomes. The doctors, in turn, included them in their taxable gross incomes. ”

“ They do not, however, in themselves constitute the 'sharply defined national or state policies' the frustration of which may, as a matter of law, preclude the deductibility of an expense under § 23 (a) (1) (A) .
We voice no approval of the business ethics or public policy involved in the payments now before us. We recognize the province of legislatures to translate progressive standards of professional conduct into law and we note that legislation has been passed in recent years in North Carolina and other states outlawing the practice here considered. ”