Litigation Costs Deduction

Litigation Costs Deduction

The Litigation Costs Deduction refers to the ability of taxpayers to deduct certain expenses incurred in legal proceedings from their taxable income.

These costs typically include attorney fees, court costs, and other related legal expenses directly associated with the litigation process. For the deduction to apply, the litigation must be related to the taxpayer’s trade or business, or in some cases, personal injury claims.

For example, if a business incurs $10,000 in legal fees while defending against a lawsuit related to its operations, it may be eligible to deduct that amount from its taxable income, thereby reducing its overall tax liability.