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  • deducting lawyer fees from business expenses

    Is it possible to deduct lawyer fees etc thru self employed deductions? My ex is self employed and looking at their business statements, claims close to 15000 a year on professional fees. Doing some of my own research, his lawyer also does business law... hmmm
    second question-anyone know what is the price range for a forensic accountant and can share their experiences?

  • #2
    He can only deduct legal fees relating to his business.

    I guess you have no way to find out if it was paid to the same lawyer? And if yes, what the business vs family split was?

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    • #3
      15,000 seems quite high for professional fees unless he is running into trouble all the time lol ..... Im sure his meetings have things to do with our case, and then is able to deduct from his business? seems pretty fishy to me...

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      • #4
        There are business deductions that are kosher with CRA but are not necessarily used when valuating business for purposes of equalization or SS. You likely have to negotiate the allowable business expenses.

        15 k for legal may or may not be in line for a business. Much depends upon the nature, size and activity of the business. I would focus on what is typical annual business operating expenses. In my situation I will not allow some expenses as I don't believe I should be penalize for poor management decisions. Having several years worth of financial documentation is important. 15 k for legal ... is that an ongoing, repeating charge/cost of doing business?

        Real estate/brokerages can have large legal bills as can land development companies, just to name a few.

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        • #5
          Originally posted by arabian View Post
          T... In my situation I will not allow some expenses as I don't believe I should be penalize for poor management decisions...
          Wow, this is a completely unreasonable concept. Wow.

          Your ex has to bear the brunt of his poor management decisions, but you want to pretend that those expenses didn't exist for determining his income??

          What if he made some great management decisions, would you then pretend that the profits from those decisions didn't exist as well? I think not.

          A performance clause for spousal support - nice (and greedy).

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          • #6
            Legal and accounting expenses for family law CANNOT be deducted as a business expense. They can be claimed by the payee for income tax purposes as a deduction.
            My x also tried to deduct legal and accounting expenses that were clearly family law issues and were all added back to his income.
            If you message me I can give you the name of 2 accountants that deal with this specifically. I used one of them and although you must be prepared as the fees are very high, in my case it was well worth it as we more than doubled my x's income.

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            • #7
              Originally posted by billm View Post
              Wow, this is a completely unreasonable concept. Wow.

              Your ex has to bear the brunt of his poor management decisions, but you want to pretend that those expenses didn't exist for determining his income??

              What if he made some great management decisions, would you then pretend that the profits from those decisions didn't exist as well? I think not.

              A performance clause for spousal support - nice (and greedy).
              No it is a smart clause which was negotiated at the time of our divorce. If my ex runs his business into the ground (on paper) as a way to avoid spousal support I am protected by this clause. I was married to a shark for 30 yrs and thankfully am up to speed on his antics.

              Equating my intelligence with greed is uncalled for and simply shows your immaturity and lack of business acumen.

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              • #8
                If some people didn't totally BS their way through court/trial there would be no need to include such clauses. In a perfect world.

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                • #9
                  Originally posted by arabian View Post
                  No it is a smart clause which was negotiated at the time of our divorce. If my ex runs his business into the ground (on paper) as a way to avoid spousal support I am protected by this clause. I was married to a shark for 30 yrs and thankfully am up to speed on his antics.

                  Equating my intelligence with greed is uncalled for and simply shows your immaturity and lack of business acumen.
                  Thanks for elaborating. What you say here is completely different than your simple statement that I commented on.

                  I hope that the clause is specified to stop him from hiding what he actually earns to avoid SS - that is wrong and you are wise to protect yourself from that.

                  However, I would hope that you would agree that how much he actually makes, and not what you want/wish/expect him to make, should be the determining factor in SS. Else I shall refer to my previous reference to greed.

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                  • #10
                    My ex went into trial claiming an income of $10k per year. As he got slapped around a little, and then a lot - by day 2 he was "prepared to concede" that he made 40k. Ummm. Not quite. Lying snake.

                    Perhaps, billm you haven't had to deal with someone who bullshits like they breathe. It is annoying, exhausting and costly to be in litigation with a habitual liar. Not to mention an abuse of the Courts.
                    Last edited by hadenough; 03-19-2013, 12:26 PM.

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                    • #11
                      My divorce agreement is quite specific and was negotiated and agreed upon by both parties in the presence of a judge. Everyone's rights are well-protected.

                      I will be in court next week (7th time in 3 yrs not including the divorce).

                      My ex has an ambulance-chaser sort of lawyer who is unfortunately not very good with family law matters. Combine that with his green-eyed g/f and my ex finds himself in court frequently. It is a disgusting waste of money.

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                      • #12
                        Tug - you say "professional fees"- that includes accounting, bookkeeping, legal.

                        I'm a small incorporated, and spend every year about $3G/year total in accounting, for what seems to me, to be rather simple things (but I don't want to mess with my bookkeeping/accounting). I don't do my bookkeeping, I pay for that, I also pay for accountant at year end - though I do my own legal.

                        What sort of business is your ex involved with? Is he a sole proprietor, or incorporated?

                        I work with corporate clients, and I could easily do a $10 bill/annum for legal work re: restructuring - incorporation, rollover, annual minutes, corporate advice.

                        I've also done wills/attorneys and we've incorporated those into the corporate bill - so you are wise to consider what fees are actually being included in the final account.

                        But frankly, I don't think $12-14 annually in total professional fees is out of the realm, for a standard small-midsize business.
                        Start a discussion, not a fire. Post with kindness.

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