Running a law practice costs money, and business expenses are often deductible from one's taxes. But if you've entered into a partnership, as many lawyers do, beware that your partnership agreement could greatly restrict your ability to deduct routine business expenses.
Attorney Peter McLauchlan learned that lesson the hard way. The Fifth Circuit recently ruled against him in a tax dispute after he deducted items that seemed routine (advertising, contract labor, wages) but were not listed as reimbursable in his partnership agreement.
The opinion provides guidance about being vigilant when drafting your partnership agreement, as well as when requesting reimbursement from your firm.