Are Your Florida Legal Fees Deductible?

January 31, 2011 by Christin Bucci
By Christin Bucci on January 31, 2011 5:58 PM |

Whether Florida attorneys' fees are deductible depends on the nature of the underlying claim. If the character of the claim brought is for business purposes, the fees are deductible; if the underlying claim is personal, the attorney fees are not deductible.

To recover attorneys' fees from the opposition, the prevailing party must show that the underlying claim was business related. Otherwise, the attorneys' fees are not deductible. Additionally, the ruling in Commissioner v. Banks, clarifies that even if such fees are deductible, they qualify as itemized deduction, and as such, are subject to the 2 percent floor, mandated by I.R.C. Section 68. 543 U.S. 426 (2005).

However, as part of the American Jobs Creation Act of 2004, Section 62(a)(20) was implemented which allows for attorneys' fees incurred in connection with any action for unlawful discrimination to be deducted. Additionally, this section provides that attorneys' fees incurred for this specific purpose are not considered itemized deductions that would be subject to the 2 percent floor.

Contact the Bucci Law Offices today at either 954-764-4440 or 954-764-4440 for your free initial consultation and let our experienced tax attorneys guide you through this stressful time by dealing with the complexities of the tax laws, as well as the IRS and state authorities.

Christin Bucci, Attorney and Counselor at Law, LL.M., C.P.A.
*Member of the Florida Bar, Federal Bar for the Southern District of Florida, Ohio Bar, District of Columbia Bar, United States Supreme Court Bar & United States Tax Court*