Originally Posted by lenj2020
I was an independent contractor for an insurance broker in 2012 and only received 1099 commission income, I filed a schedule C.
Then I left and went to work for another broker on an employee ie: salary + Commission basis. Several months after leaving the first broker a lawsuit was filed against me. The case is still pending, set for trial next month. I have about 45,000 (and incurring more) in legal fees.
I no longer file a schedule C.
Because this action was taken against my business, can these fees be deducted on a schedule C for the years incurred?
Although many legal fees are not tax deductible, the IRS does make allowances for some, enabling you to recoup at least a portion of your money.Legal fees may constitute tax deductions when they are incurred for business purposes. However, it does provide some options if you own a business or incur legal expenses that relate to a business, such suing as your employer. If you incur legal expenses in the course of producing or collecting taxable income, or for any reason relating to a tax refund, legal expenses are deductible.as you're self-employed and have business related legal fees, you can deduct the costs on Sch C. Expenses claimed on Sch C are subtracted from your gross business income. Unlike the deduction on Sch A, your legal fee deductions on Sch C aren't subject to percent limitations. Profits or losses from your Sch C business activity are reported on your 1040.