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05-12-2017 01:38 PM
Can settlement payments (out of court) made to a buyer/client as a result of negligence/omission by the real estate agent be considered business expense/deduction?
Solved! Go to Solution.
05-12-2017 03:09 PM
Welcome to the H&R Block community.
Yes, settling with a client when something is messed up or the client is mistreated is a cost of doing business. Even a court-ordered settlement paid by your business is a cost to the business. I would put this type of cost in the "other" section in Part V of Schedule C if you are a proprietor or you own a single-owner LLC. If your business is a partnership or a corporation the expense will be reported on the form (1065, 1120S, etc.) that you file for the business.
If you have any other questions I'll be glad to help.
Senior Tax Advisor (Tampa, FL)