Legal Fees deducible

[Jesse]

You can deduct legal expenses that you incur in attempting to produce or collect taxable income - does it matter if you win or loose?

Employer denied unemployment, taxpayer hired a lawyer, paid several thousands but lost the battle. Can the legal fees be deducted as an itemized deduction?

[Gretel]

I think it doesn't matter if you win or loose, at least I never heard about that limitation.


I just did a search myself to try to find if legal fees for buying (contesting someone else who thought he has the right to buy) a farm are deductible. I think yes, but am not sure if the buying process qualifies as producing income. Sorry Jesse, for clinging to your post. By the way, my taxpayers won and will indeed run this farm.

[Jesse]

Thanks, Gretel, no need to be sorry - sometimes when I ask a question and don't receive a response I'm not sure if it is because it is a stupid question I should know the answer to or if it is just no one has a definite answer to respond.

Sometimes if I just wait until March my mind isn't so tired!

[Peachie]

Sorry Jesse,

but there really are no stupid questions especially when it comes to taxes.

[Davc]

I just did a search myself to try to find if legal fees for buying (contesting someone else who thought he has the right to buy) a farm are deductible. I think yes, but am not sure if the buying process qualifies as producing income.

I think no. Costs of acquiring or perfecting title to real property are capital.