What type of legal fees are tax deductible?

There are a lot of confusions regarding the tax deductibility of legal fee expenses. The general rule is simple: they are deductible only to the extent that they are incurred to gain or produce income from a business or property.

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Legal fees in connection with routine business functions are generally deductible. If they are incurred on acquisition of capital properties, the legal fees have to be capitalized and expensed over several years. And it is obvious that legal fees for personal issues are not deductible.

Legal cost reimbursement awarded by court in a successful legal proceeding generally should be deducted from the gross amount of legal fees which are otherwise deductible or included in income.

A list of tax deductible legal fees

A list of non tax deductible legal fees

 

Additional information