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When businesses require legal counsel on complex tax issues or need representation in a tax dispute involving the IRS, the fees paid are generally deductible as a business expense.
The U.S. Supreme Court held that the taxpayer was allowed to deduct the legal fees from his gross income because they meet the requirements of §162(a), [9] which allows the taxpayer to deduct all the "ordinary and necessary expenses paid or incurred during the taxable year in carrying on a trade or business."
Congress did not grant investment activities the status of "trade or business" expenses, but instead acknowledged that since investment expenses were costs of producing income, they should be deductible. [3] Section 212(3) may allow for the deduction of accountant's fees associated with preparation of a federal income tax return.
A trust may typically deduct any cash donations made to charity. Since this is a deduction it is nonrefundable, meaning that a trust cannot deduct more in donations than it earned in taxable ...
The steps required to become a nonprofit include applying for tax-exempt status. If States do not require the "determination letter" from the IRS to grant non-profit tax exemption to organizations, on a State level, claiming non-profit status without that Federal approval, then they have actually violated Federal United States Nonprofit Laws.
Saving money on taxes is a priority for many investors. In this article, we’ll discuss a tax deduction for financial advisor fees you may have heard about, along with a few other tax-efficient ...
The Court reasoned that the deductibility of legal fees depends upon the origin of the litigated claim rather than upon the potential consequences of success or failure to the taxpayer's income status. Since the origin of the litigation was to be found in the taxpayer's marital difficulties, no deduction was allowable. [2] From the Syllabus:
Each year, high-income taxpayers must calculate and then pay the greater of an alternative minimum tax (AMT) or regular tax. [9] The alternative minimum taxable income (AMTI) is calculated by taking the taxpayer's regular income and adding on disallowed credits and deductions such as the bargain element from incentive stock options, state and local tax deduction, foreign tax credits, and ...