Potter Stewart

“ But where Congress has been wholly silent, it is only in extremely limited circumstances that the Court has countenanced exceptions to the general principle reflected in the Sullivan, Lilly and Heininger decisions. Only where the allowance of a deduction would 'frustrate sharply defined national or state policies proscribing particular types of conduct' have we upheld its disallowance. ”

“ The Commissioner and the Tax Court determined, however, that even though the expenditures meet the literal requirements of § 162 (a) , their deduction must nevertheless be disallowed on the ground of public policy. That view finds considerable support in other administrative and judicial decisions. [8] It finds no support, however, in any regulation or statute or in any decision of this Court, and we believe no such 'public policy' exception to the plain provisions of § 162 (a) is warranted in the circumstances presented by this case. ”

“ The principal function of the term 'ordinary' in § 162 (a) is to clarify the distinction, often difficult, between those expenses that are currently deductible and those that are in the nature of capital expenditures, which, if deductible at all, must be amortized over the useful life of the asset. ”

“ United States, 356 U.S. 38, 78 S.Ct. 511, 2 L.Ed.2d 568, we upheld the disallowance of deductions claimed by taxpayers for fines and penalties imposed upon them for violating state penal statutes; to allow a deduction in those circumstances would have directly and substantially diluted the actual punishment imposed.
The present case falls far outside that sharply limited and carefully defined category. No public policy is offended when a man faced with serious criminal charges employs a lawyer to help in his defense. ”

“ The respondent's legal fees, paid in defense against those charges, therefore clearly qualify under Gilmore as 'expenses paid or incurred * * * in carrying on any trade or business' within the meaning of § 162 (a) .
The Commissioner also concedes that the respondent's legal expenses were 'ordinary' and 'necessary' expenses within the meaning of § 162 (a) . Our decisions have consistently construed the term 'necessary' as imposing only the minimal requirement that the expense be 'appropriate and helpful' for 'the development of the (taxpayer's) business.' Welch v. ”

“ Joint Committee on Internal Revenue Taxation, Staff Study of Income Tax Treatment of Treble Damage Payments under the Antitrust Laws, Nov. 1, 1965, p. 16 (proposal that § 162 be amended to deny deductions for certain fines, penalties, treble-damage payments, bribes, and kickbacks) .↑ Cf. Paul, The Use of Public Policy by the Commissioner in Disallowing Deductions, 1954 So.Calif.Tax Inst. 715, 730-731: '* * * Section 23 (a) (1) (A) (the predecessor of § 162 (a) ) is not an essay in morality, designed to encourage virtue and discourage sin. ”