The opinion
OPINION.
It atm, Judge: 1. The so-called amortization issue must be decided against petitioner on the authority of Maysteel Products, Inc., 33 T.C. 1021 . Indeed, the record in the present case peculiarly calls for the denial of the claimed deduction, since the substance of the transaction was merely the declaration of a dividend to petitioner’s stockholders, a transaction that cannot produce a deduction to the corporation. The elaborate and devious steps taken to achieve that result should not and do not alter the tax consequences that would flow therefrom if the transaction were carried out directly. This has been recognized in many cases and in a wide variety of situations over a long period of years. It is a matter of familiar learning, and we do not feel impelled to review the numerous decisions reaffirming the rule. The point was stated succinctly and clearly in Minnesota Tea Co. v. Helvering, 302 U.S. 600 , where the Court said (p. 613) : “A given result at the end of a straight path is not made a different result by following a devious path.” The “given result” here was the declaration and payment of a yearend cash dividend to petitioner’s stockholders that is nondeductible, and it cannot be converted into a deductible item by “following a devious path.”
2. The remaining items in controversy stand on a different footing. In the course of following the “devious path,” petitioner actually borrowed money, paid interest thereon, paid stamp taxes, and paid a fee to its tax counselor. We hold that these items are deductible. Our decision in this respect is not inconsistent with our disposition of the first issue.
The substance versus form rule requires us to treat the totality of the steps as the declaration and payment of a nondeductible dividend; but in the course of unsuccessfully attempting to convert it into deductible amortization petitioner did actually incur expenses which, standing alone, must be allowed as deductions. Thus, it seems clear that the taxpayer in Gregory v. Helvering, 293 U.S. 465 , would not have been denied a deduction for legal fees merely because the course of action advised by the lawyer backfired. True, the transaction in the Gregory case failed to qualify as a “reorganization” because of lack of business purpose, but this does not mean that the component steps are to be completely ignored for all purposes. Real corporations were involved in the Gregory case, and surely, to the extent that securities were transferred from one to another, applicable stamp taxes were required to be paid and deductions therefor would plainly be allowable. Petitioner in the instant case actually borrowed money and is entitled to deduct the interest paid thereon. Cf. L. Lee Stanton, 34 T.C. 1 . Similarly, the $85 paid as stamp taxes is deductible. And the $1,000 fee actually paid for Glunts’ services is likewise deductible even though such services failed to produce the desired results. We know of no rule of law applicable here that is comparable to the “public policy” rule in the case of expenses relating to illegal acts, cf. Tank Truck Rentals v. Commissioner, 356 U.S. 30 ; and certain expenses, even in the case of illegal businesses, may be deductible, cf. Commissioner v. Sullivan, 356 U.S. 27 .
Reviewed by the Court.
Decision will be entered under Rule 50.
Upper and DreNNEN, JJ:, concur in the result only.