Legal fees

[disoriented]

Sole proprietorship (Sched C) was closed in 2005. During 2007, legal fees were paid for an ongoing case. Can these legal fees be deducted as a miscellanous deduction on Sched A or will a Sched C need to be done? If the former, will it be subject to the 2% floor?

Thanks in advance!

[Edsel]

Still Deductible

There is an ongoing reluctance to deduct expenses on a schedule C when there is no revenue or other activity.

If the nature of these legal fees would have been deductible if the business were still operable, the legal fees are currently still deductible as such on a schedule C. If they are protecting investments or income-producing property, this sounds like Schedule A stuff, and yes, they would be subject to the 2%.