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Tax Deduction Consulting: Legal Expenses Brigham City UT

To understand this distinction, the legal fees involved in the dissolution of a marriage provide a good example. The legal fees paid to a lawyer to handle divorce proceedings would be considered purely personal legal fees and would not be tax deductible.

Mr. A. Wayne Margetts (RFC®), LUTCF
(801) 532-1871
175 S Main St, Ste 1050
Salt Lake City, UT
Company
LPL
Qualifications
Education: BSc (Math)MBA
Years of Experience: 16
Membership
IARFC, MDRT, NAIFA
Services
Invoice, Estate Planning, Business Planning, Portfolio Management, Pension Planning, Executive Compensation Planning, Retirement Planning, Medicaid Planning, Tax Planning, Seminars Work, Employee Benefits, Stocks and Bonds, Mutual Funds, CD Banking, Annuities, Life Insurance, Long Term Care Insurance, Group Insurance, Charitable Planning, Education Plan, Charitable Foundations, Asset Protection, BuySell, Compensation Plans

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MainStreet Tax & Accounting Services
(435) 789-0691
1285 W. Hwy 40
Vernal, UT
 
H&R Block
(801) 334-4002
5845 E AVE BLDG 412
HILL AFB, UT

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H&R Block
(801) 766-2308
1438 E MAIN STE 8
LEHI, UT

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Gardner Tax & Accounting
(435) 656-8291
32 E 100 S
St George, UT
Hours
M-F 8 am - 5 pm

Data Provided by:
Mr. Gregory W. Williams (RFC®), CFP, CHFC, CLU, LUTCF, MSFS
(801) 453-2271
6340 South 3000 East, Suite 500
Salt Lake City, UT
Company
Exit Strategy Specialists, LLC
Qualifications
Years of Experience: 26
Membership
IARFC, MDRT, FPA
Services
Invoice, Estate Planning, Business Planning, Portfolio Management, Trustee Service, Pension Planning, Executive Compensation Planning, personal Coach, Retirement Planning, Tax Planning, Seminars Work, Employee Benefits, Stocks and Bonds, Mutual Funds, Mortgage Loans, Annuities, Life Insurance, Disability Income Insurance, Long Term Care Insurance, Medical Insurance, Group Insurance, Business Coach, Charitable Planning, Education Plan, Asset Protection, BuySell, Compensation Plans

Data Provided by:
Liberty Tax Service
(866) 871-1040
1132 E 3300 S
Salt Lake City, UT

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H&R Block
(801) 825-5502
1917 W 1800 N STE D6
CLINTON, UT

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H&R Block
(435) 725-3335
855 E 200 N STE 112-3
ROOSEVELT, UT

Data Provided by:
SC ACCOUNTING TAX SERVICES LLC
(801) 652-8755
408 S 900 W SLC - UT 84116
SLC, UT
 
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Tax Deduction Consulting: Legal Expenses

Legal Expense Tax Deduction

Legal fees are limited as tax deductions. A legal expense tax deduction is only granted to fees for disputes arising form business or income producing affairs. Personal legal fees are not deductible.

When a legal dispute occurs as a result of business activity or as a result of some matter that is related to the producing of income, the legal fees may be taken as a legal expense tax deduction. This is itemized as a miscellaneous tax deduction and is subject to the 2% Adjusted Gross Income floor. Personal legal fees are not tax deductible.

To understand this distinction, the legal fees involved in the dissolution of a marriage provide a good example. The legal fees paid to a lawyer to handle divorce proceedings would be considered purely personal legal fees and would not be tax deductible. However, if the divorce involved the collection of alimony and the alimony was going to be considered as taxable income, the portion of the legal fees paid for this purpose would be deductible. It would be necessary for the lawyer to make a statement detailing what portion of his fee was attributable to the alimony collection.

Another example would involve personal injury suits. If the reward for the personal injury suit was considered taxable income, the legal fees would be deductible. Some personal injury suits do not involve taxable income and, in this case, the legal fees would not be taxable. This would be the same with legal fees regarding a Will dispute. Since any inheritance would not be income that would be reported and taxed on your income tax return, the legal fees would not be deductible.

The principle involved here is actually that the legal fees are considered much the same as a business expense. In a business model, you are only taxed on the profit that you make. If you buy a product for $10, sell it for $15, and pay your salesman $2, you have made a profit of $3. It is the $3 that is subject to tax, not the entire $15 you re...

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