679 (1967),[1] is a significant case cited for its opinion which further articulated a much-litigated phrase "ordinary and necessary" business expense in the Tax Code, 26 U.S.C.S.

In Lohrke, the Tax Court determined that when the taxpayer paid for expenses that he was not actually obligated to pay, he could still deduct them as an "ordinary and necessary" business expense under 26 U.S.C.S.

Although petitioner and Textiles are separate taxable entities, petitioner paid for the damages caused by a defective shipment of fiber for which he owned the patent which created it.

The respondent argued that because petitioner was not obligated to pay, this payment did not fall under the definition of an "ordinary and necessary" business expense found in 26 U.S.C.S.

[2][1] This is significant because there is a general rule that one taxpayer cannot deduct expenses that are the obligation of another.