Which of the following legal expenses paid by the Kerr Corporation can be deducted in the current year?
I.Legal fees to resolve a tax dispute with the Internal Revenue Service.
II.Legal fees to purchase land that will be used to expand its warehouse.

Question

Which of the following legal expenses paid by the Kerr Corporation can be deducted in the current year?
I.Legal fees to resolve a tax dispute with the Internal Revenue Service.
II.Legal fees to purchase land that will be used to expand its warehouse.
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Quizplus · Accepted Answer

Only legal fees paid to resolve a tax dispute with the IRS are deductible in the current year as they are considered to be directly related to the production of income. Legal fees paid to purchase land are considered a capital expense and must be capitalized and depreciated over time.

Which of the Following Legal Expenses Paid by the Kerr