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The Complete Idiot's Guide® To Lawsuits by Victoria E. Green

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Is the Loss Deductible?

Once again, the safe answer is “it depends.” Some losses are deductible, or at least nontaxable. For example, the amount paid in alimony payments tends not to be considered income for the person making the payments. The payments are taxable income to the person getting alimony, though. Other losses can be considered business expenses and can be deducted that way. Generally, if your loss is due to what a court has decided is your bad behavior, then tax law doesn’t allow you to deduct what you have to pay from your gross income.
As with a win, you may also be able to deduct your legal fees from income. Be sure to double-check this, as it varies from case to case. What makes tax law so difficult for many people to deal ...

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