Any amount paid by an individual for preparing the business portion of income tax returns and resolving tax deficiencies for a sole proprietorship, including litigation expenses, can be deducted as business expenses.

Although it is common practice for preparers to list their fees as business expenses of the client's sole proprietorship, the IRS recently had taken a hard line regarding deduction of expenses for return preparation and tax advice. A new ruling reversed that position.

In the ruling, an individual ran a consulting business as a sole ...

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