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Legal fees for a divorce appeal deductible?

Sent to Tax Experts February 21 12:03 PM

I was divorced on August 1st of 2004. The divorce lasted me 3 years and cost me over $ 50,000. in attorney's fees. Within 1 month of the divorce decree. My ex-husband filed an appeal with the Indiana Court of Appeals. The Appeal took over a year and cost me over $ 10,000.00. The Appeals court did not change anything in the divorce. My ex-husband still has not turned over the accounts and money owed me in the divorce. As soon as the Indiana Court of Appeals came back with their ruling, he filed another appeal with the Supreme Court of Indiana. The Supreme Court denied even hearing the matter. But I still had to pay attorney's fees in excess of $ 6,000.00 for that appeal, because my attorney had to file a brief and a response to his appeal. I still have not received the money and accounts owed to me in the divorce. My attorney says I will have to sue him. My question is, can I deduct any of the legal fees I paid in 2005, about $ 9,000.00 total, for these 2 appeals?

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Munster, Indiana

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February 21 3:04 PM (3 hours and 25 seconds later)
         
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Under the regulations (IRS Reg. Sec. 1.262-1(b)(7)), legal and other professional fees incurred in connection with a divorce, separation or decree for support by either party are not deductible. Legal expenses, however, incurred by either party in collecting alimony or support payments are deductible under IRC Sec. 212 if the income is taxable.

Legal fees incurred to obtan clear title to property are generally capitalizable into your cost basis. Attorneys' fees paid in a suit to quiet title to lands or property are not deductible; but if the suit is also to collect accrued rents thereon, that portion of such fees is deductible which is properly allocable to the services rendered in collecting such rents.

Sorry. Only the portion of your fees allocable to collecting taxable income from your ex-husband will be deductible.

Because it is impossible for me to identify and consider ALL the relevant facts, this advice is not intended or written to be used for the purpose of avoiding penalties, and cannot be used for that purpose.

Christopher Phelps -- Certified Public Accountant (CPA) -- 100% Positive Feedback on 2668 Tax Accepts
CPA, CFP, PFS, Tax Practitioner 21 Years, Member AICPA/CSCPA Tax/Financial Planning Committee Member
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