ONE CALL, THAT’S NOT ALL (Deducting The Cost of Legal Fees)

“The power of the lawyer is

in the uncertainty of the law.”

Jeremy Bentham

Doctor Walter Palmolive arrived at Hwang National Park in Zimbabwe on June 30, 2015. The sweeping savannas spread out like an ocean vista and held host to the most feared and well-known predators in all of Africa.

An Expensive Game

Doctor Palmolive hunted big game all over the world, including the polar bear, moose, buffalo, and caribou, but not yet an African cat. In the early morning of July 1, 2015, Dr. Palmolive got his wish as Cecil the Lion – a major attraction to visitors of Hwang National Park – was lured from the game refuge onto private hunting land where Cecil met his fate at the hands of Dr. Palmolive.


The news that Cecil the Lion had been killed spread quickly through social media and cable news networks. Dr. Palmolive became vilified worldwide. Zimbabwe Parks and Wildlife Management authorities conducted an investigation and charges were brought against the guide company, but no charges were brought against Dr. Palmolive by Zimbabwe authorities.


The U.S. Fish and Wildlife Service declined to take legal action. However, a private citizen group mounted a legal challenge against Dr. Palmolive under the Lacy Act, which makes it a Federal crime to import or purchase any wildlife in violation of any foreign law.  As legal threats mounted, Dr. Palmolive decided to hire a lawyer.

One Call, That’s All

Suddenly in the distance, Dr. Palmolive noticed a billboard boasting solutions to all things legal.  So he makes one call.  That’s all. Two hundred and fifty thousand ($250,00.00) dollars later, he manages to dodge all legal bullets, but temporarily closes his medical practice due to public protests.

All told, Cecil the Lion cost Dr. Palmolive approximately five hundred thousand ($500,000.00) dollars in attorney fees and lost business.  Dr. Palmolive is now financially distressed.

Not a Very Good Year

Dr. Palmolive is hoping to start 2016 on a better note with a huge tax deduction for the attorney fees he incurred in 2015 — thanks to Cecil.


Cecil may yet get his revenge because personal legal fees are generally non-deductible, while legal fees incurred in a trade or business are deductible.

Trade or Business Legal Fees

Tax law does not specifically mention legal fees as a deductible item, so facts and circumstances are critical in the determination. Generally, legal fees will fall into one of two categories (1) a trade or business expense; or (2) a non-business/personal expense.


Legal fees incurred in a trade or business are generally deductible if such fees are (i) ordinary and necessary; (ii) reasonable in amount; (iii) paid or incurred in the tax year in which the taxpayer seeks a deduction; and (iv) paid by the person to whom services were rendered.

Non-Business/Personal Legal Fees

Personal legal fees are generally non-deductible unless they meet the requirements of a deductible trade or business expense.  As such, personal legal fees are deductible if they were paid or incurred: (i) for the production or collection of income; (ii) for the management, maintenance, or conservation of property held for the production of income; or (iii) in connection with the determination, collection or refund of any tax.  In addition, such fees must be ordinary, necessary, and reasonable in amount.

Origin Of The Claim Test 

When it is unclear whether a legal fee (or any other expense) is personal or a deductible trade or business expense, courts will employ an “origin of the claim” test. Under this test, a court will examine the origin and character of the claim giving rise to the questionable deduction to determine whether it arose from a personal transaction, or whether it arose from a trade or business endeavor.

Cecil the Lion was clearly the origin of all Dr. Palmolive’s legal troubles. So it will be difficult for Dr. Palmolive to justify a deduction for legal fees related to his lion hunt gone bad.  He may try to argue that the fees were incurred (in part) to protect his medical practice from public protests (a trade or business expense), but such expenses would not likely be considered “ordinary” by any standard.

As with any questionable deduction, the context in which the expense was incurred is critical, which in this case arises out of a personal hobby, i.e., lion hunting. And so it is that Cecil and his wildlife friends may yet get the last laugh as Dr. Palmolive will be unable to deduct his legal fees.

The Last Laugh

Cecil, like the great lion, Aslan, in The Chronicles of Narnia, may yet triumph over death to become an enduring symbol of conservation. On December 21, 2015, the U.S. Fish and Wildlife Service placed the African lion on the endangered species list.


Theus Law Offices provides a complete range of tax planning and litigation services for businesses and individuals. If you are facing a tax issue and need a Louisiana tax attorney in Alexandria, Lafayette, Lake Charles, Baton Rouge, New Orleans, Shreveport, Monroe, or elsewhere in Louisiana, let our tax attorneys help you.