NOSPAM[at]joinme.com wrote:

- quote -

Deduct in full in 2004.

ChEAr$,
Harlan Lunsford, EA n LA
Mon, 10 Jan 2005

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In 2004, a cash-basis S-corp sued to collect on a debt. The
court awarded judgment for the corp for the amount of the
debt plus $x in legal fees. In fact, the S-corp spent $y in
legal fees in 2004 (where y> x) and anticipates spending even
more in 2005 to collect the debt. So far, the corp has
collected nothing, although the debt is probably collectible
eventually. The corp is regularly in the business of
lending money.

Question: Can the corp deduct in 2004 the full y spent in
legal fees or must it capitalize x and deduct only the
excess fees y-x ?

Replace NOSPAM by eeyore when responding by email.

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