Can I taek this off my personal income taxes? Thanks
No lawyer wants to take the risk of malpractice regarding tax advice when he/she has not been retained. You should check with your CPA and ask if it quallifies as a deductable expense necessary for the preservation of a capital asset.
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First, I am sorry about the lawsuit and the use of your personal funds. Your ability to receive a tax benefit for the funds spent defending this matter depends in part on the nature or basis of the lawsuit against the corporation and whether the corporation is an "S" corporation or a "C" corporation. An S corporation is a pass through entity which may enable you to recieve some benefit for the funds spent. Whether the claim or lawsuit will support a current deduction depends upon the basis for the lawsuit or claim. while this depends on the nature of the claim and the analysis is somewhat technical, but if the lawsuit and defense was to protect or preserve the receipt of taxable income, then there may be a basis for the deduction for legal fees. If the lawsuit is regarding ownership of property or another captiol asset, the n the fees may be required to be capitolized to be amoritized over future years. Needless to say, some ceativity may be possible on those issues and the analysis can be somewhat technical and fact specific. You should review this with and CPA or attorney who focuses on tax issues.
Best to talk to a CPA.
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Yes. You paid the corporation's legal fees and are entitled to either be reimbursed by the corporation (which would make the legal fees and expense for the croporation) or treat it as a capital infusion (which would add to your capital account but would also allow the corporation to treat the legal fees as an expense). If the corporation doesn't take the expense on it's books then you'd be able to claim the expense on yours.
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