anyone know of any tax cases, or guidance or had experience of whether legal fees in defending a warranty claim is allowable for tax or not.
a client had to get a machine fixed and did not pay for the repair as he claims that it is covered by warranty, but the garage states that it is not covered, and is now suing my client for the cost. is my clients legal fees in defending the claim allowable
thanks in anticipation
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Was it in the course of trade?
It sounds like it was, in which case there are no grounds for disallowance.
yes in course of a trade. are you aware of any case law that might apply.
however i feel that the client may be chancing his arm in claiming that the work is covered by warranty, and that the case could fall quite easily