What is the name of your state? Calif
I sued a guy in Arizona in small claims court. He ripped me off in 2003. Most of my expenses (court/legal costs) were in 2004. I won in 2004. I collected in 2005. My questions are :
1) Are these court/legal expenses tax deductible?
2) If not, can I deduct them against the income of the suit?
3) Is the money I received from the suit considered damages and thus I do not have to report it as income?