T and T Accounting Posted September 29, 2015 Report Share Posted September 29, 2015 I have client who received a payout as a result of a class act lawsuit. The way the agreement reads the legal fees were 25% of the settlement fund created by the defendant. My question is my client allowed to deduct the legal fees on his personal return? Quote Link to comment Share on other sites More sharing options...
jklcpa Posted September 29, 2015 Report Share Posted September 29, 2015 Maybe. The legal fees would have to fall within the scope of those that would be deductible on Sch A as a miscellaneous deduction subject to the 2% of AGI haircut. 1 Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted October 1, 2015 Report Share Posted October 1, 2015 And also, you need to determine if the 1099 is for the settlement amount before the deduction of the fee, or if it is the net amount of the claim after the fees were deducted. If net, no deduction, of course. Quote Link to comment Share on other sites More sharing options...
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