There are numerous reasons why a deduction may be denied for legal, accounting and other professional expenses: an expense may be regarded as attributable to capital; it may be regarded as not wholly and exclusively laid out for business purposes; or it may be seen as an application of profits already earned rather than as an expense in calculating those profits.
For commentary on the tax treatment of fines and penalties, see ¶708-475.
The cases cited below contain examples of all the above arguments.
Deductible legal expenses
The following expenditure has been held to be deductible against business profits.
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