Shareholder Agreement Tax Deductible

The Finanzgericht agreed with the taxable person that those reorganization costs were properly deductible from the entity as legitimate business expenses. In this case, there were two active shareholders who both froze the estate at the same time. As part of this process, they also incurred considerable costs in updating and redesigning their shareholders` agreement. The Finanzgericht also found that the shareholders` agreement was of great importance for the protection of the company in its relations with the shareholders and found that the costs associated with the recasting of the shareholders` agreement were not personal expenses of the shareholders. In addition, the fact that the tribute payments also concerned other undertakings denied the conclusion that the expenditure was ordinarily and necessary for the paying company. Before shareholders` attorneys` fees are deductible, the company must demonstrate that a lawsuit is the direct result of actions taken by the shareholder for the primary profit of the paying business. The courts will generally find that actions that benefit the shareholder or are not directly favourable to the business do not favour its activities. If a company cannot prove an exclusive purpose, the deduction is refused and the shareholder is charged with receiving a constructive dividend. My family has contributed a few shares in a private company, and this company is just beginning.

And I paid lawyer`s fees for organizing partner contracts with my own money.

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