102751 Canada Inc. –Quebec Court of Appeal finds that legal fees incurred to recover a misappropriation of substantially all the taxpayer's assets were currently deductible
After substantially all of the assets of a Canadian corporation (Mobile) owned by a German family were misappropriated by a Canadian director (Black), Mobile brought an action against him, with the action subsequently being settled in 2012 by the payment by Black of an agreed sum plus interest thereon at 5%. The Court confirmed the finding of Cameron JCQ below that the various legal and accounting fees incurred by Mobile were fully deductible rather than being capital expenditures: the fees had been incurred to preserve Mobile’s income-producing assets and there had been a resulting generation of the interest of 5%.
Neal Armstrong. Summary of Agence du revenu du Québec v. 102751 Canada Inc., 2021 QCCA 605 under s. 18(1)(a) – professional fees.