Discussion:Attorney Fees paid for "Preservation of Estate"
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Discussion Forum Index --> Tax Questions --> Attorney Fees paid for "Preservation of Estate"
| 20 June 2007 | |
| Client of mine is being sued by ex boy-friend for part of her estate. She was told any attorney fees incurred to "Preserve her Estate" would be tax deductible. I haven't been able to find anything that says they would be. Anyone out there have a clue about this?
Thanks! T | |
| 20 June 2007 | |
| No. She's just protecting her assets from her ex boyfriend's lawsuit. Evidently, he wants half even though they were never married. She was told that, because they were never married, the fees would be deductible. | |
Chautauqua (talk|edits) said: | 20 June 2007 |
| Reg. 1.212-1(k) | |
| 20 June 2007 | |
| "her assets" is not the same thing as "her estate". Ask her attorney what the definition of estate is. | |
| 20 June 2007 | |
| Ok...it's her assets that the ex is sueing for. She's taking legal steps to preserve her ownership of this assets including cash investments, house with home office, and lots of personal assets. Are her legal fees deductible? I'm leaning towards deducting them, because a large percentage of her assets are income producing (investments) or used in her business (1/3 of home qualifies for home office). | |
| 20 June 2007 | |
| OK, but under the rules for deducting fees relating to the preservation of an estate, it relates to the 1041, not the 1040. As Chautauqua pointed out, the fees would have to relate to the production of income to deduct on the 1040.
In any case, it would be advisable for the attorney to issue the invoice with the amount of time spent on each item or asset, so that the proper determination could be made: i.e. 1.5 hours defending brokerage account, 2.75 hours defending auto, 4 hours defending residence, etc. | |
| 20 June 2007 | |
| Tstolley, although there's no divorce proceeding, this sounds quite similar to U.S. v. Gilmore. If client's legal fees originated from a personal dispute, she likely can't deduct such legal fees just b/c she's defending her income producing assets. In other words, your client's legal fees must stem from an income producing activity/trade or business, as opposed to merely protecting such assets in a personal dispute. | |
| 20 June 2007 | |
| http://supreme.justia.com/us/372/39/case.html | |
| 20 June 2007 | |
| Thanks Bengoshi. The more I look at this the more certain I am that, best case scenario, she can capitalize some of them. I'll advise client.
Appreciate your and Kevin's help. | |
| 27 June 2007 | |
| Not sure why an ex-boyfriend would have any claim to assets under any state law. | |
| 27 June 2007 | |
| Ex boyfriend could have claim as 'common law marriage', ie. did client and ex ever hold themselves out as a married couple? I had a client that had a 'girlfriend', they broke up, she sued for half of the assets accumulated, she won since client had purchased health insurance listed her as 'wife / spouse' even tho they never filed a MFJ or MFS federal tax return.
If the attorney provides 'tax planning advice' or 'asset protection' then the fees s/b Sch a @ 2% Fees for defending 'title' capitalized Agree with Kevin, get attorney to itemize TexCPA 15:09, 27 June 2007 (CDT) | |
| 27 June 2007 | |
| What is up with people these days. Gotta wach who you go out with O.o | |
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