When an assessment fee is paid to decide whether a business should buy, it is usually a capital cost and not an authorized deduction. However, if the valuation is used to support a loan application for use in the business, these expenses may be immediately considered a borrowing fee if they are less than $100 or over the term of the loan or if they are five years from the date of the loan, with the shortest date chosen. Such planning usually involves significant accounting, legal and evaluation expenses. Are these charges deductible from the corporation or do they constitute a tax benefit to the shareholders themselves who, if paid by the corporation? This question was asked directly in the tax court of Truck Base Corporation v. The Queen in 2006. The possibility of a shareholder benefit becomes a consideration for the owner/manager, who may take significant accounting and valuation costs related to the planning of the succession of his shares in an operating company. For example, in the case of a typical real estate freeze, the owner/manager exchanges his common shares of the company for preferred shares, and the company then issues new common shares to a family fund. The future capital gain of the business will be paid to the Trust for the benefit of the owner/manager and his family, as the beneficiary of the trust. My family trust has brought some shares in a private company, and this business is barely launched. And I paid a lawyer`s fee for developing shareholder contracts with my own money. And then I transferred shares belonging to my family trustee to another member of the private company. My question is, can I claim these legal fees on my personal tax return? In this context, the costs incurred by individuals incurring legal fees would not be deductible unless there is a clear link to the expenses associated with the deduction of evaluable income (e.g.
B for an investment property). In other cases, the costs may be private in nature, so a deduction would not be possible under any circumstances. There are many reasons why a deduction may be denied for legal and professional expenses: an expense can be considered capital; It may be considered non-exhaustive and exclusively for commercial purposes; or can be seen as an application of profits already realized and not as a burden in calculating those gains. In this case, there were two active shareholders who both passed into estate blockages concluded at the same time. This process has also resulted in significant costs for updating and revamping the shareholder contract. The tax court also found that the shareholders` pact was of great importance to the protection of the company in its dealings with shareholders and found that the costs incurred for the redesign of the shareholder contract were not personal expenses of the shareholders.