Can I claim legal fees?

Q: I had to pay legal fees for a recent court case. Can I claim any part of this? - JoJo, Chelsea

The following answer was provided by Wesley Rickard, CPA, Quin, Rickard, Lipshires, & Grupp LLP, Norwood

A: In order to deduct legal fees the fees must be related to taxpayer income and be covered under one of the various IRS Code sections, such as: to carry on a trade or business, for an individual for the production or collection of income; management of property held for production of income and in connection with the determination collection or refund of any tax.

Legal expenses in a criminal proceeding only connected with a trade or business are deductible. Legal expenses in acquiring property are generally treated as a capital expenditure. Legal fees for divorce is controversial, the personal aspects of divorce are not and only those that relate to tax issues, alimony, and property settlements are.

So there are some basic rules but without knowing the cause of your legal fees can ones comments be more specific.

The following answer was provided by Mark Misselbeck, Levine Katz Nannis & Solomon PC, Needham.

A: Any deduction for legal fees depends on the source of the claim. If it has to do with income or the production of income, then a deduction may be available. If it has to do with protecting property rights or perfecting them, then the legal fees become part of the cost of the property (and are eventually deducted when the property is sold). If they have to do with a tort (injury to another) or criminal activities, they will generally not be deductible. You may need to speak with someone about your specific circumstances to determine whether or not your fees will result in a deduction.