Moore, Friendly, and Feinberg, Circuit Judges.
This appeal is from decisions of the Tax Court, Leo H. Irwin, Judge, entered October 25, 1972, determining liabilities in taxpayers' income tax returns for the years 1965 through 1968 in the total amount of $6,184.29. (See 1972 T. C. Memo 177, 31 T.C.M. 870 (1972)). Taxpayers Cyril Cole and Jean E. Cole, husband and wife, were found liable for a tax deficiency of $4,257.07; taxpayer Morton Cole, brother of Cyril, was found liable for a deficiency of $1927.22. Hereinafter, the term "taxpayers" will refer to Morton and Cyril Cole.
Taxpayers are brothers who for many years have been partners in the law firm of Cole & Cole of Hartford, Connecticut. Between 1937 and October, 1949, Beatrice F. Cole, a sister of taxpayers, was employed by Cole & Cole as office manager.
On January 12, 1946, Beatrice suffered a heart attack while at work. Her doctor diagnosed her condition as "essential hypertension" brought on by the stress of her employment and recommended that she take a leave of absence from her job. Beatrice took an extended trip to Cuba and returned to work in the spring of 1946 with her condition greatly improved.
On September 20, 1949, and October 3, 1949, Beatrice again suffered heart attacks while at work. Her doctor attributed these attacks to the pressures of her employment and recommended that she stop working completely, since he believed that her hypertension would continue and would not improve. The doctor also suggested that Beatrice take extended trips to keep her mind from the tensions of her job and that she take along on her trips a traveling companion who could summon help if she became incapacitated.
Strictly following her doctor's advice, Beatrice did not work after October 3, 1949, at which time she was fifty-six years old. In addition, since October, 1949, Beatrice has taken numerous trips away from Connecticut accompanied by a traveling companion, her sister Ethel Cole.
At the time Beatrice suffered her heart attacks and left her employment, the Cole & Cole law partnership did not carry workmen's compensation insurance and had not established a self-insurance plan. Taxpayers and the Commissioner of Internal Revenue agree that Beatrice was rendered totally incapacitated by her heart attacks and that, under Connecticut law, she became entitled to receive from Cole & Cole direct payments of up to $32 per week plus reimbursement for all of her related medical expenses.*fn1
Pursuant to statute and agreement, from 1951 through 1958 and again from 1961 through 1968 (the period from 1958 to 1961 having been covered by special agreement), taxpayers paid to Beatrice weekly compensation payments and considerable sums for her medical expenses. Included as medical expenses during the years at issue are the following amounts expended for travel expenses of Beatrice and her companion, Ethel Cole: 1965 -- $6,217.56; 1966 -- $2,078.93; 1967 -- $4,962.16; 1968 -- $1,895.38; a further $2,749.53, deemed "unidentified" by the Tax Court was also expended in 1968.*fn2 This item was stipulated by the parties to have been expended by Beatrice for meals and lodging during her 1968 travels. These travel-related expenses total $17,903.56. During these same years taxpayers paid to Beatrice the following amounts as weekly compensation payments: 1965 -- 52 weeks at $30.00=$1560.; 1966 -- 27.5 weeks at $30.=$825.; 1967 -- 75 weeks (probably to adjust for payments covering only 27.5 weeks in 1966) at $30.=$2,250; 1968 -- 52 weeks at $30=$1,560. These payments total $6195.
Taxpayers considered the above travel expenses and weekly compensation payments to have been required by the Connecticut Workmen's Compensation Law and they therefore treated them as ordinary and necessary expenses of their law partnership deductible under Section 162 of the Internal Revenue Code of 1954.*fn3
The Tax Court upheld the Commissioner's determination that the amounts paid for Beatrice's travels should not have been deducted as ordinary and necessary business expenses and further found that no deduction could be allowed for the weekly compensation payments paid to Beatrice after September 18, 1965, the date on which the 624 week limitation contained in the Connecticut statute requiring such payments expired.*fn4 We affirm the decision of the Tax Court.
Taxpayers assert that the travel expenses which Beatrice and her sister incurred over the four years in question were properly deductible as ordinary and necessary expenses of the law partnership within the meaning of Section 162 I.R.C. of 1954, because those expenses were allegedly mandated by the ...