Deducting legal fees

[philananda]

I have legal fees connected to suing a brokerage that lied to me and provided me with substandard service. Since I am retired and the accounts this brokerage handled constituted the bulk of my income, can I, as I learned in an earlier post, deduct these fees because they are in essence related to my main source of livlihood? The case also deals with income taxes that were incurred unneccesarily.

 

[loku]

Attorney's fees

Yes, I believe you can deduct the attorney’s fees as an expense of producing income, subject to the 2% floor. The fees dealing with the income taxes can be deducted as an expense of resolving tax issues.

You can usually deduct legal expenses that you incur in attempting to produce or collect taxable income or that you pay in connection with the determination, collection, or refund of any tax.

You can deduct expenses of resolving tax issues relating to profit or loss from business (Schedule C or C–EZ), rentals or royalties (Schedule E), or farm income and expenses (Schedule F), on the appropriate schedule. You deduct expenses of resolving nonbusiness tax issues on Schedule A (Form 1040).