Discussion:Legal expenses related to acquisition price of investment property
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| {{ForumReplyPost|UserID=CrowJD|Date=7 November 2009|Text=Generally, I agree with you, I think it will be difficult for the plaintiff to win, assuming he's an adult and not suffering from some kind of disability and that your client' conduct did not amount to duress or the telling of a huge lie, BUT the case isn't over yet. | {{ForumReplyPost|UserID=CrowJD|Date=7 November 2009|Text=Generally, I agree with you, I think it will be difficult for the plaintiff to win, assuming he's an adult and not suffering from some kind of disability and that your client' conduct did not amount to duress or the telling of a huge lie, BUT the case isn't over yet. | ||
| - | Anyway, I would be looking for the deductibility of legal fees in cases alleging fraud. From other answers I've seen on here, the law seems pretty liberal in allowing deductiblity of legal fees for a business, even if criminal liability is alleged. Am I right about that? It seems your client was trying to collect AR, which should be connected with the business? OR was this a personal loan your client was trying to collect?}} | + | Anyway, I would be looking for the deductibility of legal fees in cases alleging fraud. From other answers I've seen on here, the law seems pretty liberal in allowing deductiblity of legal fees for a business, even if criminal liability is alleged. Am I right about that? It seems your client was trying to collect AR, which should be connected with the business? OR was this a personal loan your client was trying to collect? |
| + | |||
| + | And, can you deduct legal expenses when something goes sour on a collection attempt of a personal loan (fraud allegation)?}} | ||
Revision as of 19:27, 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. | |
| 2009-11-07 | |
| he suing for money damages for fraud to pay for the sales price difference. But it is seller's alleging with remorse after sale, and my client was not involved with any fraud at all. | |
| 7 November 2009 | |
| Generally, I agree with you, I think it will be difficult for the plaintiff to win, assuming he's an adult and not suffering from some kind of disability and that your client' conduct did not amount to duress or the telling of a huge lie, BUT the case isn't over yet.
Anyway, I would be looking for the deductibility of legal fees in cases alleging fraud. From other answers I've seen on here, the law seems pretty liberal in allowing deductiblity of legal fees for a business, even if criminal liability is alleged. Am I right about that? It seems your client was trying to collect AR, which should be connected with the business? OR was this a personal loan your client was trying to collect? And, can you deduct legal expenses when something goes sour on a collection attempt of a personal loan (fraud allegation)? | |
