Tax,
Law Practice,
Appellate Practice
Jun. 7, 2022
‘Pay me tomorrow’ may not defer tax on lawyers
Plaintiff lawyers can actually use a benefit most other people – including other lawyers – can’t: structured legal fees. Reduced to simplicity, the concept of a legal fee structure is a kind of tax-advantaged installment plan that doesn’t rely on the credit worthiness of the defendant or the client.
Robert W. Wood
Managing Partner
Wood LLP
333 Sacramento St
San Francisco , California 94111-3601
Phone: (415) 834-0113
Fax: (415) 789-4540
Email: wood@WoodLLP.com
Univ of Chicago Law School
Wood is a tax lawyer at Wood LLP, and often advises lawyers and litigants about tax issues.
All lawyers know something about taxes. We all pay them, and we all know that legal fees are income. In fact, they are ordinary income, and are even subject to self-employment taxes. Lawyers occasionally try to argue that legal fees are capital gain, but that is an awfully tough sell with the IRS. So, you have to figure that you will be paying full freight in taxes on your legal fees, no matter what.
But what about timing? Much in the tax ...
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