(a) Facts: The parties divorced in Florida in 2011. While the divorce was pending, the husband was in the process of liquidating his business, Vicis Capital, LLC. He received, while the action was pending, $4.7 million in distributions.
Florida classifies the marital property as of the date of filing. Nevertheless, the divorce court found that $4.7 million of the distributions was deferred compensation for services rendered to Vicis before the action was filed and thus was marital property. The remainder of the distributions were held to be nonmarital property, apparently on the theory that they were compensation for efforts after the date of filing.
On his 2010 and 2011 tax returns, the husband deducted over $1 million each year in divorce-related legal and professional fees spent litigating Vicis-related issues in the divorce case. The IRS disallowed the deduction, and the husband sought relief in the Tax Court.