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When are attorney fees tax deductible On what basis? from thelawadvisory.com

Are Tax Attorney Fees Deductible Goodwill in 2023?

Introduction

Tax attorney fees can be a significant expense for individuals and businesses alike. If you have hired a tax attorney to assist you with tax preparation, planning, or representation, you may be wondering if these fees are deductible. In this article, we will explore the deductibility of tax attorney fees and whether goodwill plays a role in the deduction.

What are Tax Attorney Fees?

Tax attorney fees are the fees charged by attorneys who specialize in tax law. These attorneys can provide a wide range of services, including tax preparation, planning, and representation. Tax attorney fees can vary depending on the complexity of the issues involved and the amount of time spent on the matter.

Deductibility of Tax Attorney Fees

Tax attorney fees are generally deductible as a miscellaneous itemized deduction on Schedule A of your tax return. However, there are some limitations and restrictions on the deductibility of these fees. For example, the total amount of miscellaneous itemized deductions must exceed 2% of your adjusted gross income before you can claim them as a deduction.

Goodwill and Tax Attorney Fees

Goodwill is an intangible asset that represents the value of a business beyond its tangible assets, such as property and equipment. Goodwill can be created through a variety of factors, including reputation, customer relationships, and brand recognition. When a business is sold, goodwill can be a significant factor in the purchase price.

Deductibility of Tax Attorney Fees and Goodwill

Tax attorney fees can be deductible as a business expense if they are incurred in the ordinary course of business. If tax attorney fees are incurred in connection with the sale of a business, they may be deductible as a capital expense rather than a business expense.

Restrictions on Deductibility of Goodwill

Goodwill is generally not deductible as a business expense. However, if goodwill is acquired through the purchase of a business, it may be amortized over a 15-year period. The amortization of goodwill can provide a tax benefit to the purchaser of the business.

Conclusion

In conclusion, tax attorney fees can be deductible as a miscellaneous itemized deduction on your tax return. However, there are limitations and restrictions on the deductibility of these fees. Goodwill is generally not deductible as a business expense, but it can be amortized over a 15-year period if it is acquired through the purchase of a business. If you have any questions about the deductibility of tax attorney fees or goodwill, it is recommended that you consult with a tax professional.

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