Discussion:Legal expenses related to acquisition price of investment property
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| Revision as of 18:54, 7 November 2009 Jamesc (Talk | contribs) (I think is littl) ← Previous diff |
Revision as of 19:08, 7 November 2009 CrowJD (Talk | contribs) (Is the seller su) Next diff → |
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Revision as of 19:08, 7 November 2009
Discussion Forum Index --> Advanced Tax Questions --> Legal expenses related to acquisition price of investment property
Discussion Forum Index --> Tax Questions --> Legal expenses related to acquisition price of investment property
| 2009-11-07 | |
| A client buyer received a land instead of original loan receivable from a seller. The buyer paid off the purchase loan. Now, the seller alleged that the buyer committed a fraud at the time of sale because buyer forced seller to transfer the land, when seller had better price offers. Seller filed a lawsuit for the damage claim to pay for the sales price difference.
Is there any way for the buyer to deduct the legal fees? Normally, legal fees are not deductible if it is for the acquisition of the property. But, sometimes it may be deductible in case of investment property as 2% AGI misc. deduction. I tried to find regulations or court cases but failed to find. Please help. | |
| 7 November 2009 | |
| This doesn't sound directly tied to the acquisition of the land. It sounds more like defending title to investment property which took place after the acquisition. Look into the rules for that character - which do fall in the 2% of AGI category. | |
| 7 November 2009 | |
| Kathi - for some reason I thought that title defense legal fees added to the basis of the property. | |
| 7 November 2009 | |
| FWIW
...(c) The cost of defending or perfecting title to property. | |
| 2009-11-07 | |
| I think is little different from defending or perfecting title to property.
I found the following paragraph from CCH Federal Tax Advisor 12,322 Signal section. "However, this amount would probably be a deductible loss, assuming that investment property is involved." I am trying to find any court cases or other authoritative document to back up this point. | |
| 7 November 2009 | |
| Is the seller suing to get the land back? Or is he suing for money damages for fraud? Sounds like he's suing for money damages for the alleged personal actions of your client. | |
