Tax Law (Questions About Taxes)/Attorney Fees


I am an adult living on my own and my father and I are part of a law suit relating to our investments and income.  My father is paying for the entire law suit charges. His tax preparer said we must split the charges between us b/c I am part of the law suit even though I did not pay a dime.He said he'd consider the payment made by my father (the other half) as a gift.  This sound like bad advice.  Wouldn't it be better to have one person deduct all of it?  My fathers income is between 250 & 300 Thousand.  The tax bill close to 100,000. If we both deduct part of it we will lose part of what we can deduct to the 2% AGI rule.  He wants a gift document to be filled out for proof.  Isn't this crazy?

your father can deduct 100% of the fees he paid to the lawyer as 2% in the pursuit of income on schedule A IF IF IF he did not pay you wouldn't have to (ie. the lawyer agreed to bill only him and you go for a free ride as beneficiary of the legal pursuit's favorable outcome).

"... part of a lawsuit..." there are others? family members?  non family non related?

it doesn't matter if it is better (which it would generally to whomever had lower income) but the point is who incurred the liability to pay - your dad, you or both of you?   if you both owe the lawyer and he paid all of your bill too, then yes it is a payment of a gift (which then requires a gift tax form be paid as it is more than the annual allowance!))))

Id be curious to know more about the lawsuit - who is the defendant, what were the particulars, why you have an action against them, what were the wrongs that gave rise to an action, was the action settled?  

Tax Law (Questions About Taxes)

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Tax and general business including hospitality related (hotel mgmt degree and experience in industry prior to obtaining ms tax and cpa).


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