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Tax Deductibility Of Divorce Attorney Fees

Corporate Law Discussions

Tax Deductibility Of Divorce Attorney Fees

Postby Inocencio » Tue Dec 06, 2016 5:55 pm

s About Taxes)/Tax deductibility of Divorce Attorney Fees Advertisement Expert: Glenn D Schnabel - 6/25/2008 I ran up $30,000 in legal fees for my divorce, which included a trial on separation dates, and a hearing on spousal support, a mandatory settlement conference, filing of joinders with his former employers, dividing pensions and retirement accounts, etc.

Based on my limited knowledge, I believe that the portion of fees that are spent on tax, financial advise and the portion of fees resulting in taxable income are tax deductible, is that correct? What code supports this? What else can I deduct with regard to my divorce attorney fees. My divorce dragged on for 2.5 years. I filed on April 29, 2004 and it was finalized on August 10, 2007. What year can I claim this deduction? I am thinking 2007 because there was no settlement and no transfer of assets until the divorce was final.

Thank you.

ANSWER: Nellie,

Thank you for your question. 1)Based on my limited knowledge, I believe that the portion of fees that are spent on tax, financial advise and the portion of fees resulting in taxable income are tax deductible, is that correct? Yes. The best way is to have your Attorney spell out in his/her invoice what amount is for personal financial advice.

According to the IRS web site :

Legal fees relating to personal tax advice may be deductible on Line 22, Schedule A(Form 1040), if you itemize deductions. However, the deduction is subject to the 2 limitation on miscellaneous itemized deductions. See Publication 529, Miscellaneous Deductions.

2)What code supports this? Code section 162 under the protection and conservation of income.

3)What else can I deduct with regard to my divorce attorney fees. Nothing, unfortunately.

4)What year can I claim this deduction?

In the year it was paid. You are a cash basis taxpayer.

hope this is helpful.

---------- FOLLOW-UP ----------

I really appreciate your timely reply.

Can you be more specific about the code section. There seems to be a lot of subsections to it. And I was unable to find the relevant section with the wording which I may present to support my case during an audit. Thank you.
Inocencio
 
Posts: 42
Joined: Sun Apr 06, 2014 4:10 pm

Tax Deductibility Of Divorce Attorney Fees

Postby Gotthard » Mon Dec 12, 2016 3:19 am

s About Taxes)/Tax deductibility of Divorce Attorney Fees Advertisement Expert: Glenn D Schnabel - 6/25/2008 I ran up $30,000 in legal fees for my divorce, which included a trial on separation dates, and a hearing on spousal support, a mandatory settlement conference, filing of joinders with his former employers, dividing pensions and retirement accounts, etc.

Based on my limited knowledge, I believe that the portion of fees that are spent on tax, financial advise and the portion of fees resulting in taxable income are tax deductible, is that correct? What code supports this? What else can I deduct with regard to my divorce attorney fees. My divorce dragged on for 2.5 years. I filed on April 29, 2004 and it was finalized on August 10, 2007. What year can I claim this deduction? I am thinking 2007 because there was no settlement and no transfer of assets until the divorce was final.

Thank you.

ANSWER: Nellie,

Thank you for your question. 1)Based on my limited knowledge, I believe that the portion of fees that are spent on tax, financial advise and the portion of fees resulting in taxable income are tax deductible, is that correct? Yes. The best way is to have your Attorney spell out in his/her invoice what amount is for personal financial advice.

According to the IRS web site :

Legal fees relating to personal tax advice may be deductible on Line 22, Schedule A(Form 1040), if you itemize deductions. However, the deduction is subject to the 2 limitation on miscellaneous itemized deductions. See Publication 529, Miscellaneous Deductions.

2)What code supports this? Code section 162 under the protection and conservation of income.

3)What else can I deduct with regard to my divorce attorney fees. Nothing, unfortunately.

4)What year can I claim this deduction?

In the year it was paid. You are a cash basis taxpayer.

hope this is helpful.

---------- FOLLOW-UP ----------

I really appreciate your timely reply.

Can you be more specific about the code section. There seems to be a lot of subsections to it. And I was unable to find the relevant section with the wording which I may present to support my case during an audit. Thank you.
Gotthard
 
Posts: 37
Joined: Tue Jan 07, 2014 1:17 am

Tax Deductibility Of Divorce Attorney Fees

Postby Paton » Wed Dec 14, 2016 12:07 am

Nellie,

Thank you for your follow up:

I looked it up in the regs.

TITLE 26--INTERNAL REVENUE    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY PART 1_INCOME TAXES(CONTINUED)--Table of Contents

Sec.  1.67-1T  2-percent floor on miscellaneous itemized deductions(temporary).  (ii) Expenses for the production or collection of income for which a deduction is otherwise allowable under section 212(1) and(2), such as investment advisory fees, subscriptions to investment advisory publications, certain attorneys' fees, and the cost of safe deposit boxes,    (iii) Expenses for the determination of any tax for which a deduction is otherwise allowable under section 212(3), such as tax counsel fees and appraisal fees, and

Here is the link : http://www.access.gpo.gov/nara/cfr/waisidx_07/26cfr1b_07.html

Hope this is helpful.
Paton
 
Posts: 53
Joined: Sat Feb 01, 2014 6:15 pm


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