Sometimes Clouds Have a Tax-Deductible Silver Lining

Even though Dr. Conrad Murray, recently convicted of involuntary manslaughter in the death of pop singer Michael Jackson, is facing a possible four-year prison sentence, he has at least one comfort. His legal fees in the case will almost certainly be tax deductible.

In a posting at Forbes.com, tax attorney Robert W. Woods says that, because the trial resulted from Dr. Murray’s medical treatment of Mr. Jackson and because Mr. Jackson was paying him for that treatment, Murray can deduct payments to his lawyers as a business expense.

The IRS requires tax-deductible business expenses to be both ordinary (“common and accepted in the person’s trade or business”) and necessary (“helpful and appropriate for the business”). But this standard is a low one, according to Woods. A person may face a criminal trial only once in a lifetime, but since legal fees are common and accepted in business, Murray’s are likely to qualify as “ordinary”. And it is hard to argue that Murray’s legal expenses in the case weren’t necessary. After all, he can’t continue his business in jail.