Legal Definitions - tax costs

Tax costs refer to the increased tax liabilities resulting from a corporate transaction or a losing party's challenge to pay certain costs of the winning party in litigation.

A company merges with another company, resulting in increased tax liabilities due to the transaction.

In a lawsuit, the winning party incurs litigation costs and requests that the losing party pay for them. The losing party can challenge their responsibility for the litigation costs by making a "motion to strike" or a "motion to tax costs" based on applicable laws or contracts controlling the situation.

These examples illustrate how tax costs can arise from corporate transactions and litigation, and how a losing party can challenge their responsibility for paying certain costs.