Legal expenses refer to the fees, costs and expenses of any kind incurred by any person compensated in this document and their lawyer when investigating, preparing, defending, or providing evidence, submitting documents, or taking other action with respect to any threatened or asserted claim. A common category of legal expenses is operating expenses. This includes costs associated with running your business on a daily basis, such as rent, utilities and payroll. If the legal services you're paying for are related to the operation of your business, they likely fall into this category.
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Is legal expense an expense?
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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.
