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Returning Member
posted Jun 5, 2019 3:22:26 PM

Are arbitration fees deductible?

We were taken to arbitration for a sale of our house last year. The new owners were claiming we did not disclose something. We ended up winning, but wanted to know if the lawyer expense is deductible?

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1 Best answer
Alumni
Jun 5, 2019 3:22:28 PM

I'm assuming that based on the owned 2 out of 5 year exclusion, that this sale was not taxable.

 Legal fees are generally not deductible. There are two significant exceptions

  • Legal fees are deductible if incurred to determine or collect any tax liability.
  • Legal fees are deductible if the suit is to secure taxable income.

Because of those criteria, your legal fees would not be deductible.


1 Replies
Alumni
Jun 5, 2019 3:22:28 PM

I'm assuming that based on the owned 2 out of 5 year exclusion, that this sale was not taxable.

 Legal fees are generally not deductible. There are two significant exceptions

  • Legal fees are deductible if incurred to determine or collect any tax liability.
  • Legal fees are deductible if the suit is to secure taxable income.

Because of those criteria, your legal fees would not be deductible.