Norman was the sole shareholder and operator of two successful video arcades. While he was in the hospital with heart problems, his wife, Helen, filed for divorce and took a number of legal steps, including obtaining a temporary restraining order against him to gain control of his businesses. In addition, Helen and her boyfriend fired the two corporations’ employees, and took cash and equipment from the businesses.
When Norman got out of the hospital, he engaged a law firm to help him regain possession of his businesses and recover the assets his wife took, and to represent him in the divorce action. Norman incurred $65,000 in legal fees in trying to get back his business and the divorce action. Are his legal fees deductible?