To answer your question, "yes" it would be double dipping since you already recorded an expense when you paid the attorney fees.
What should be happening is:
- You record a liability on your books; debit cash and credit loan
- Next you debit legal fees and credit cash
- You should prepare a proper loan document with appropriate interest between yourself and the business
- Any repayment of the loan to yourself will be a combination of principle and interest. Only the interest will be deductible.
- Depending on the repayment schedule, the IRS could reclassify the "loan" as a capital contribution. So make sure you have a repayment plan and actually make payments to yourself.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
