Final answer:
The given statement `Legal fees incurred in connection with a criminal defense are not deductible even if the crime is associated with a trade or business` is FALSE.
The answer is option ⇒b. False
Step-by-step explanation:
In certain cases, legal fees incurred in connection with a criminal defense can be deductible, even if the crime is associated with a trade or business. However, there are specific conditions that must be met for the deduction to be allowed.
- 1. Ordinary and necessary: To be deductible, the legal fees must be considered ordinary and necessary expenses incurred in carrying on a trade or business. This means that the legal fees must be directly related to the business and must be common and accepted in the industry.
- 2. Business purpose: The legal fees must have a clear business purpose and be directly connected to the operation or management of the trade or business. This requirement ensures that the deduction is not allowed for personal or non-business-related legal expenses.
- 3. Reasonable amount: The legal fees must be reasonable in amount. The reasonableness of the fees is assessed based on factors such as the nature of the legal services, the complexity of the case, and prevailing market rates.
- 4. No illegal activities: It's important to note that the deduction is not allowed for legal fees incurred in connection with illegal activities. If the crime associated with the trade or business is illegal, the legal fees would not be deductible.
The answer is option ⇒b. False