Legal Expenses on a previous business

The previous business's assets were sold 5 years ago. The lease still is legally in my name (as an individual, not as a corporation), but the new tenants refused to pay. Currently there is a lawsuit with a large sum of legal expenses related to this business. 1) Are the legal expenses deductable? If so where? (C or 2106) 2) If I am to pay the lease payments, are those deductable even if the time those fees were charged, I had no intention of conducting business?

wrote

I'm sure you know what's going on, but your post lacks a few facts. Whose "previous business's assets" are you talking about, and what was the form of that business? For a sole-proprietor, unincorporated individual, the remaining business expenses that are paid, sometimes years after the "business" is closed, can still be taken on Schedule C if that's where they would have been taken if the business was still active. Your current intentions aren't a factor, as long as the expenses are an extension of your previous business activity. If the business you are describing was in any other form, then a different answer may be forthcoming. The tax treatment of legal expenses depends on the nature of the issue being litigated.

-- Paul Thomas, CPA snipped-for-privacy@bellsouth.net

"Paul Thomas, CPA" wrote

This was e-mailed to me, but thought I'd share it here for others to comment on.

----- Original Message ----- From: To: "Paul Thomas, CPA" Sent: Thursday, January 04, 2007 9:51 AM Subject: Re: Legal Expenses on a previous business

It's still a tad confusing as to what type of entity you had. Form 2106 is for employee business expenses and don't relate to either Schedule C or any of the corporate forms (1120 series). What I posted a couple of weeks ago still stands. If the expenses you are now paying relate to the business activity, you can still deduct them on the appropriate forms or schedules even though there hasn't been an active business for years. You should make plans to talk to a local CPA or EA in your area to discuss how you can best claim the expenses you are now incurring on these transactions.

-- Paul Thomas, CPA snipped-for-privacy@bellsouth.net

Ooops, I mistyped. I filed 1120's, not 2106. C Corp was the original entity.