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Posted by NadCixelsyd on March 8, 2007, 12:23 am
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My car was damaged in an auto accident involving another
driver. The other insurance company declared that I was
100% at fault and paid zero. I disagreed and took them to
small claims court. I asked for damages for their frivolous
position. The judge agreed. She awarded punitive damages
for their frivolous position. My actual damages were $2000,
but the judge awarded me $2500, is the other $500 taxable?
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Posted by PeterL on March 10, 2007, 2:49 am
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> My car was damaged in an auto accident involving another
> driver. The other insurance company declared that I was
> 100% at fault and paid zero. I disagreed and took them to
> small claims court. I asked for damages for their frivolous
> position. The judge agreed. She awarded punitive damages
> for their frivolous position. My actual damages were $2000,
> but the judge awarded me $2500, is the other $500 taxable?
I didn't know you can get punitive damage in small claims.
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<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
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<< to this newsgroup as well as our anti-spamming policy >>
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<< Copyright (2006) - All rights reserved. >>
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Posted by Bill Brown on March 10, 2007, 3:08 am
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> My car was damaged in an auto accident involving another
> driver. The other insurance company declared that I was
> 100% at fault and paid zero. I disagreed and took them to
> small claims court. I asked for damages for their frivolous
> position. The judge agreed. She awarded punitive damages
> for their frivolous position. My actual damages were $2000,
> but the judge awarded me $2500, is the other $500 taxable?
Yes. Report it on line 21 of Form 1040.
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by ltsllc on March 10, 2007, 3:08 am
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> My car was damaged in an auto accident involving another
> driver. The other insurance company declared that I was
> 100% at fault and paid zero. I disagreed and took them to
> small claims court. I asked for damages for their frivolous
> position. The judge agreed. She awarded punitive damages
> for their frivolous position. My actual damages were $2000,
> but the judge awarded me $2500, is the other $500 taxable?
"My actual damages were $2000, but the judge awarded me
$2500, is the other $500 taxable?"
The $2,000 is property damage for your car so it is NOT
taxable as long as the $2,000 is not more than the basis of
your car. For exampe, if last week you paid $1,200 for the
car, then $800 would be taxable.
The $500 punitive damages are taxable.
Rudy
www.LizcanoTaxServicesLLC.com
Disclaimer: The posted answer is for educational purposes
only and Lizcano Tax Services, LLC and/or Rodolfo Lizcano
have not been engaged to render any tax, accounting, legal,
or other professional services.
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by brownie on March 10, 2007, 3:08 am
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> My car was damaged in an auto accident involving another
> driver. The other insurance company declared that I was
> 100% at fault and paid zero. I disagreed and took them to
> small claims court. I asked for damages for their frivolous
> position. The judge agreed. She awarded punitive damages
> for their frivolous position. My actual damages were $2000,
> but the judge awarded me $2500, is the other $500 taxable?
The $500 punitive damages are taxable as ordinary income.
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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