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I am a small business owner. A couple months back I was invited

to meet in person I...
I am a small business owner. A couple months back I was invited to meet in person I had been having a lot of business dealings with. While meeting with this business associate I had a few beers. I drove home from this meeting and was arrested for DWI. I ended up getting some small fines and community service as a result and never lost driving privileges. I got pulled over initially because I forgot to turn on my headlights when pulling out of a gas station parking lot.

My question is if the attorney fees are a business deduction as I was driving a company vehicle while leaving a company meeting. I was not found guilty of this DWI.
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Answered in 1 minute by:
9/27/2013
Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 16,592
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Megan C :

Thank you for your question and thanks for using Justanswer.com

Megan C :

How are you today?

Megan C :

I hate to be the bearer of bad news, but the attorney fees for the DWI are not deductible as a business expense.

Megan C :

Attorneys fees that are incurred as a result of producing income are tax deductible. Driving, even in a company car, is not considered an income producing activity. As such, the fees are not deductible. They are considered personal legal fees.

Customer:

would criminal defense ever be business tax deductible?

Megan C :

What type of criminal defense are you asking about...for DWI?

Customer:

in general? Just looking to understand the wide scope of it,

Megan C :

Well it depends on the crime committed, among other things.

Megan C :

Let me explain a little deeper - give me a few minutes to type a response.

Megan C :

John DiFronzo v. Commissioner, T.C. Memo 1998-41 (1998) held that organized crime families can deduct the legal fees that are incurred in defending against conspiracy and fraud charges

Customer:

ok. I would like to see you paid but I would also like to get another expert to comment on this as I just like 2nd opinions. How do I proceed?

Megan C :

I have a good article for you to read about deducting criminal legal fees. It's available, HERE

Megan C :

Well, to get the second opinion you would rate my response as "excellent" and then we could relist the question to the board.

Megan C :

Do you have any further questions?

Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 16,592
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Ron, I was going to add that traditionally, if you are convicted of a crime the legal fees are not deductible, but there have been cases where those who are found guilty of securities fraud have been able to deduct their unsuccessful legal fees.

It all depends on if the legal fees are connected with the production of income.

Please let me know if you need anything additional. Please come back and see me any time you have a question that needs answered. Thanks again!
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Lane
Lane, JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 13,227
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Hi,

Yes, so sorry, but there is an overriding irc code that legal fees for criminal proceedings are not deductible ... Only for civil proceedings such Torts, breach of contract, and even intentional torts, such As wrongful death or intentional infliction of emotional distress, but when you cross the line from torts, contract law, or even constitutional law to crimes, (criminal law), attorney's fees aren't deductible.

Sorry

Lane
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Megan C
Megan C
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