In what circumstances will a corporation be liable for expenses paid by the Corporation to the Defendant's lawyers in an action brought by stockholders against the Defendant?

In this instance also the deductibility of the payments would have been clear enough if the stockholders' action had failed; we would see no warrant for withholding a deduction from the corporation simply because stockholders had asserted, without sufficient grounds, that it had title to property held by a director, as to which the corporation remained silent. To be sure the expenses paid by the corporation would have assisted the director in defending his title, but that is not what the regulation means. Neither do we perceive why the plaintiffs' success should change this; the payments to the defendants' lawyers were not made in an effort by the corporation to perfect title but rather under a contract obligating it to pay for efforts to defeat the claim being made on its own behalf. If analysis is advanced by the explanation that perfection of the corporation's title is not "proximately" brought about by expenditures to preserve its neutrality or to assist those opposing, cf. Bingham's Trust v. CIR, 325 U.S. 365, 374, 376, 65 S.Ct. 1232, 89 L.Ed. 1670 (1945), we can use the adverb with a good conscience.