Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 11-22-2014, 05:32 PM
Junior Member
 
Join Date: Nov 2014
Posts: 3
Partition Action Legal Fee deduction

My co-owner was court ordered to buy out my half interest in a jointly owned rental property. I have incurred $20,000 in legal fees to get this partition action complete. I am assuming the $20,000 is a business expense since I was forced to the courts to get sale completed. I have a choice of settlement dates, 12/2014 or 1/2015. Since my legal fees occurred in 2014 would it be advantages to settle in 2014 and use the $20,000 as an expense or would it be better to settle in 2015 and use the $20,000 off my cost basis of property. Thank you.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 11-22-2014, 08:37 PM
Moderator
 
Join Date: Oct 2010
Posts: 5,231
Quote:
Originally Posted by inbb2b View Post
My co-owner was court ordered to buy out my half interest in a jointly owned rental property. I have incurred $20,000 in legal fees to get this partition action complete. I am assuming the $20,000 is a business expense since I was forced to the courts to get sale completed. I have a choice of settlement dates, 12/2014 or 1/2015. Since my legal fees occurred in 2014 would it be advantages to settle in 2014 and use the $20,000 as an expense or would it be better to settle in 2015 and use the $20,000 off my cost basis of property. Thank you.
The tax law does not specifically mention legal fees as deductible items. Therefore, the deductibility of such expenditures depends on the context in which they are incurred;in general, you can't deduct legal fees paid for advice or help on your personal matters or for things that don't produce taxable income; Your legal fees are personal expenses. However, all of the legal expenses that you incur connected with your ownership or operation of a business enterprise are fully deductible. This includes legal fees incurred in establishing your business, legal fees associated with maintaining your business operations and those legal expenses that arise out of any legal dispute or action involving your business enterprise.

If you're concerned about whether you'll be able to deduct attorney's fees, you can always ask your attorney -



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #3 (permalink)  
Old 11-22-2014, 09:04 PM
Junior Member
 
Join Date: Nov 2014
Posts: 3
Attorney fees - tax deductable?

You stated "those legal expenses that arise out of any legal dispute or action involving your business enterprise." That is what I am asking, can I deduct fees for having to hire an attorney to force a partition action because the co-owner of property refused to split the rents. The court ruled in my favor, ordering the property sold and all back rentals reimbursed. Would these attorney fees paid to settle a business dispute be a business expense on my tax return.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #4 (permalink)  
Old 11-24-2014, 12:26 AM
Moderator
 
Join Date: Oct 2010
Posts: 5,231
Quote:
Originally Posted by inbb2b View Post
You stated "those legal expenses that arise out of any legal dispute or action involving your business enterprise." That is what I am asking, can I deduct fees for having to hire an attorney to force a partition action because the co-owner of property refused to split the rents. The court ruled in my favor, ordering the property sold and all back rentals reimbursed. Would these attorney fees paid to settle a business dispute be a business expense on my tax return.
as i said, it depends; aslongas you file Sch C/SE then yes you can dedcut fees for having to hire an attorney to force a partition action for biz expenses. however, the IRS says that most individuals renting property to others will report rental income using Sch E, NOT ON Sch C/SE. However, if you provide what the IRS calls "substantial services" to your tenants, or if you're a real estate dealer, you would report the income using Sch C
/SE, tyhen i guess you can deduct it as part of your biz related expenses on your Sch C.please contact the IRS or IRS EA/ a CPA specializing in taxds in yourt local area for more info in detail.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #5 (permalink)  
Old 11-24-2014, 12:35 AM
Moderator
 
Join Date: Oct 2010
Posts: 5,231
Quote:
Originally Posted by inbb2b View Post
You stated "those legal expenses that arise out of any legal dispute or action involving your business enterprise." That is what I am asking, can I deduct fees for having to hire an attorney to force a partition action because the co-owner of property refused to split the rents. The court ruled in my favor, ordering the property sold and all back rentals reimbursed. Would these attorney fees paid to settle a business dispute be a business expense on my tax return.
Generally, you can't deduct fees paid for advice or help on personal matters.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Legal Fees lenj2020 Sole-Proprietorship 3 09-18-2014 03:45 PM
What action do I take LittleJ Miscellaneous 1 03-04-2014 01:38 AM
1099 Misc - is this legal? chicagolaw Miscellaneous 1 01-22-2011 08:32 AM
Question about IRS action a2zebra Income 1 01-22-2010 06:57 AM
Legal Disclaimer Samatg Announcements 0 02-03-2007 02:24 AM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning