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Old 04-04-2011, 03:04 PM
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1099-c and attorney fees

in '2010 I hired an attorney to help me negotiated the lowering of some credit card debt and fed tax debt. He charged me a fee of $9,000. He as successful in the reduction, however, I received a 1099-c for a cancelation of a debt (credit card) for 16,000. Can I deduct the attorney fee to off set the 1099-c?



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Old 04-04-2011, 08:14 PM
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“I received a 1099-c for a cancelation of a debt (credit card) for 16,000. Can I deduct the attorney fee to off set the 1099-c?”----> Legal fees are only deductible for tax advice, the preparation of tax returns, or for legal advice directly related to the generation of taxable income. You can deduct legal fees when it produces taxable income like back due wages from a dead beat employer. So, no to the bankruptcy legal fees. if any 1099 C(canceled debt) are reported and the taxpayer is insolvent or bankrupt as filed the canceled debt will not have to be included in income.



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