T and T Accounting Posted September 29, 2015 Report Posted September 29, 2015 I have client who received a payout as a result of a class act lawsuit. The way the agreement reads the legal fees were 25% of the settlement fund created by the defendant. My question is my client allowed to deduct the legal fees on his personal return? Quote
jklcpa Posted September 29, 2015 Report Posted September 29, 2015 Maybe. The legal fees would have to fall within the scope of those that would be deductible on Sch A as a miscellaneous deduction subject to the 2% of AGI haircut. 1 Quote
kcjenkins Posted October 1, 2015 Report Posted October 1, 2015 And also, you need to determine if the 1099 is for the settlement amount before the deduction of the fee, or if it is the net amount of the claim after the fees were deducted. If net, no deduction, of course. Quote
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