Legal Expenses for Business Owner’s Fraud Defense Are Deductible

Legal expenses equaling about $366,000 to defend a business owner from criminal wire fraud and money laundering charges are still tax deductible because after examining the origin and character of the claim, the costs can be tied to a profit-seeking motive, the US Tax Court said Monday.

Judge Peter J. Panuthos said that the legal expenses paid to defend Jonathan Chang that were reported as business expenses by HOC Associates LLC can be deducted by Chang and his wife, Wei-Lin Chang for their 2016 tax year. Chang had also set up nonprofit HOC Associates Inc. for religious purposes, and in ...