Level 3

attorney fees

Forum|Forum|6 years ago
February 29, 2020
2 replies
22 views

I have a client who was a w-2 employee separated service and sued to challenge his non compete 20 mile radius as to prohibitive. He has been able to obtained contract work at a considerable distance and is facing having to sell houses and move to be closer to the hospital (required). Now his suit was unsuccessful can he deduct the attorney fees.

It seems to me that they are for the protection and ability to earn a living locally. but may be a stretch to associate them with his contractor work (self employeed) that is out of town.

This topic has been closed for replies.

qbteachmt

Level 15

Personal legal costs ("was a w-2 employee" and "sued to challenge his non compete") are Misc deductions and not Business deduction.

"they are for the protection and ability to earn a living locally"

20 miles is still pretty much Local. Do you have IRS info showing otherwise?

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M

mpasseckAuthor

Level 3

His non compete bars him from working within 20 miles which is forcing him to find work over 100 miles away from his home. He challenged the non compete to allow him to contract closer to home. I think that it would be aggressive to say that the fees are related to his ability to secure contract work and am asking for any information and opinions.

BobKamman

Level 15

His status as a former W-2 employee is a red herring. Is the local work he hopes to do also as an employee, or as self-employed? (Apparently he no longer hopes to do it, since he lost, but his status as self-employed outside the local area may be significant.)

20 miles is a smaller radius than most non-competes. Courts look at the distance (50 miles is often used) and the time period (three years might work; forever, not so much).

M

mpasseckAuthor

Level 3

he hopes to get contract (self employeed) work closer to home. already lost with the court on the non compete now wondering if there is a way to deduct legal costs

qbteachmt

Level 15

Personal misc deductions are subject to a floor, so it's hard to know if there will be any benefit as deduction.

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