Swan Corporation incurred $10,000 of accounting fees and $15,000 of legal fees in connection with the redemption of stock from its shareholders.Swan can deduct the accounting fees ($10,000),but not the legal fees ($15,000),as trade or business expenses under § 162.

Question

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Legal fees incurred in connection with stock redemption are generally considered to be capital expenditures and cannot be deducted as trade or business expenses under § 162. Accounting fees, on the other hand, can generally be deducted as trade or business expenses.

Swan Corporation Incurred $10,000 of Accounting Fees and $15,000 of Legal