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A taxpayer inquired whether they could deduct legal, expert, and solicitor fees from a court-awarded compensation payment. The DGT ruled that the compensation constitutes a capital gain and that such expenses are not deductible as they are considered consumption expenditure.
Taxpayers receiving judicial compensation must be aware that associated legal and professional costs cannot be offset against the income, potentially increasing the effective tax burden on the gain.
The tax team reviews your specific situation.
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