Legal Fees-Maximum Deductible

[zeros]

My client is getting a divorce and has incurred legal expenses in connection with that. Her attorney said she could deduct $3500.00 maximum for expense in getting alimony. Legal expenses would be deductible but didn't know there was a maximum on this. The CPA's that prepared the returns prior to me didn't know that either. Anybody heard of this?

[Gretel]

My client is getting a divorce and has incurred legal expenses in connection with that. Her attorney said she could deduct $3500.00 maximum for expense in getting alimony. Legal expenses would be deductible but didn't know there was a maximum on this. The CPA's that prepared the returns prior to me didn't know that either. Anybody heard of this?

No, I haven't. Maybe this is the max that the attorney feels he can charge for alimony matters?

[zeros]

Maximum Deductible

I don't believe she is a tax attorney. The legal bill was much more than the $3500. I was thinking that possibly the attorney designated $3500 for the alimony issue.

[S T]

Attorney

In divorce issues I have had attorneys provide a statement relating to tax deductible issues, such as alimony or QDRO's that might survive the legal deduction for the production of taxable income, such as alimony or taxable retirement benefits.

Maybe what the attorney is saying is that the maximum deduction that this taxpayer can claim related to the legal fees in relation to the alimony is that "only" $3,500 of the total attorney fees can be allocated to the collection and taxability of alimony. The balance of the attorney fees would NOT be tax deductible.

I do not believe that the Attorney is saying that the Federal maximium legal expense deduction is $3,500. It might be something more or less dependning on each Taxpayer's circumstance.

Request a statement and breakdown from the Attorney for backup records.

Sandy

[erchess]

Correction to my earlier post

I have deleted my earlier post in this thread because it was wrong. I do not handle many divorced taxpayers and I should have looked the rules up before spouting off.

TTB page 12-11 has a very good explanation of what is and is not deductible in terms of the legal expenses of a Divorce. I will not attempt to repeat it here.

It now sounds to me as though the attorney knows or thinks that she knows what legal expenses of a divorce are taxable and has kept up with her billable hours accordingly. I echo the suggestion from ST that OP obtain an itemized bill and check it out against what is in TTB. It is not reasonable in my opinion to rely on the opinion about taxes of a lawyer who is not a Tax Lawyer per the Bar Association of the relevant State or Territory. It is,,I think it is reasonable to rely on TTB and the practitioner need not dig further unless for some reason unhappy with the results of following TTB. Having been on this board for a while now and having used TTB I personally would be hesitant to go against it unless I feel that the facts of my case are materially different from those in the case TTB discusses.