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A taxpayer inquired whether amounts resulting from a court-ordered seizure for legal costs and late payment interest can be treated as capital losses. The DGT ruled that they are, but excluded the loan principal as it is considered a consumption expense.
This ruling clarifies that while interest and legal costs arising from judicial rulings can be classified as capital losses for tax purposes, the principal amount of a debt remains a non-deductible consumption expense.
The tax team reviews your specific situation.
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