Question:
Does section 162(q) preclude me from deducting my attorney¡¯s fees related to the settlement of my sexual harassment claim if the settlement is subject to a nondisclosure agreement?
Answer:
No, recipients of settlements or payments related to sexual harassment or sexual abuse, whose settlement or payment is subject to a nondisclosure agreement, are not precluded by section 162(q) from deducting attorney¡¯s fees related to the settlement or payment, if otherwise deductible. See Publication 525, Taxable and Nontaxable Income, for additional information on when all or a portion of attorney¡¯s fees may be deductible.