Other Tax Questions
Questions and comments on other topics covered in Fairmark.com, such as UTMA accounts, and any tax questions that don't fit our other categories.
Are attorney's fees for netogiating a prenup deductible?
Posted by: textpxy, December 14, 2007 04:05AM

Attorney's fees related to the aspects of a divorce that produce taxable income appear to be deductible. What about attorney's fees related to negotiating prenup?

I can't seem to find any specific mention of this, but since the principal issue addressed by a prenup is how taxable income/assets are handled, it seems logical that they would be deductible.

Any thoughts?


Re: Are attorney's fees for netogiating a prenup deductible?
Posted by: Bill Brown, December 14, 2007 11:41AM
Sounds like a non-deductible personal expenditure to me.

Re: Are attorney's fees for netogiating a prenup deductible?
Posted by: Drewremedy, December 14, 2007 02:48PM
I fail to see where a prenup is anything but a personal expense.

However if the two folks contemplating marriage are also contemplating purchase or operation of business assets then I would think that legal counsel as to partnership or corporation agreements which might include exit issues as well would fall into scope of business related expenses.


Re: Are attorney's fees for netogiating a prenup deductible?
Posted by: Art, December 14, 2007 04:28PM
Provided those legal expenses were explicitly invoiced as such.

begging the question
Posted by: jainen, December 14, 2007 04:38PM
>>since the principal issue addressed by a prenup is how taxable income/assets are handled, it seems logical that they would be deductible.<<

In logic this is called "begging the question," where you use the premise as proof of your conclusion.

Can you support your conclusion with anything else? Actually, tax work doesn't follow the classical rules of logic anyway, which perhaps is why begging the question is so common on this forum. Tax positions are best established by a process similar to legal reasoning, building a structure of precedent through various kinds of rulings and other authority.

Re: Are attorney's fees for negotiating a prenup deductible?
Posted by: Boutwell, December 14, 2007 04:53PM
Reminds me of how divorce can be an exception to the rule that a primary residence must be owned and occupied for two out of the last five years -- but marriage isn't specifically listed, so someone selling a house to move in with a spouse may be out of luck.

The answer to this question is "depends on the facts and circumstances," and the analogy to divorce negotiations is apt. Since the mantra of family-law lawyers is "I know nothing about taxes, go ask your tax adviser to review this," the deduction easiest to justify is the one paid to the tax specialist.

Re: Are attorney's fees for netogiating a prenup deductible?
Posted by: Uncle Sam, December 15, 2007 02:22AM
Jainen hit the nail on the head.
Textpxy - you're making a presumption that first of all is not true in mostly all circumstances. Professional fees paid "for the preservation of income" seems to be a new way of twisting the truth a bit in order to make a personal expenditure tax deductible.
How can a prenup agreement address issues if the marital split up hasn't even occurred yet? Providing services for the protection of assets is different than "preservation of income".
Secondly, not all marital assets are considered "taxable income" to preserve. You've got municipal bond investments, non-deducted IRA accounts, non income producing assets (personal effects) that wouldn't be deductible since they are purely personal in nature. In addition, you cannot take tax deductions for items that are not taxable.
And contrary to what Boutwell claims, just because you pay a tax specialist fee, it doesn't make it automatically deductible.

Re: Are attorney's fees for netogiating a prenup deductible?
Posted by: Boutwell, December 15, 2007 06:04AM
>And contrary to what Boutwell claims, just because you pay a tax specialist fee, it doesn't make it automatically deductible.<

Contrary to what Uncle Sam read, that's not what I wrote.

Re: Are attorney's fees for netogiating a prenup deductible?
Posted by: Uncle Sam, December 15, 2007 02:56PM
Just WHAT DID YOU WRITE, Boutwell?



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