The corporate entity owns its own assets and is responsible for its own debts. The shareholders of the shares are considered the legal owners of the company. However, they are not responsible for the debts and taxes of the corporation.
Legal, accounting, and other professional fees paid or incurred in connection with a business transaction or primarily for the purpose of preserving existing business reputation and good will are generally deductible. In conclusion, there is no correct answer to the question of what category of expenses legal services fall into.
Legal entities are an important part of any business or organization. Learn what they are and how entity management software can help manage them.
Legal and professional expenses that produce long-term benefits are non-deductible capital expenses that are included in the cost of ownership. The proof of the origin of the claim determines if a legal expense is related to an ordinary and necessary business activity or to a capital asset.
While legal problems can arise in any criminal or civil matter, public discourse on legal issues often revolves around regulations that address controversial social issues such as abortion, human and civil rights, gun control, immigration, the death penalty, and privacy. A legal problem is something that occurs that has legal implications and that may require the help of an attorney to resolve it.