Content AreaWalter recently received a notice of an income tax deficiency of $21,000 from the IRS. He hires an attorney to handle his IRS problems. Walter's legal expenses are $4,000. Can Walter deduct the legal expenses? I. He can deduct the full amount if the tax deficiency relates to his business. II. He can deduct the full amount if the tax deficiency relates to rental income other than business income. III. He can deduct the legal fees if the income tax deficiency is personal in nature. a. Statements I and III are correct. b. Only statement III is correct. c. Only statement II is correct. d. Statements I and II are correct. e. Only statement I is correct