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Posted by Woody on May 6, 2008, 5:52 pm
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I am suing a professional for actual damages. When I win, will the proceeds
be taxable, since they are just to reimburse me for what I lost? Are my
legal fees tax deductable?
If it is more complicated than this, what are the issues involved?
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Posted by removeps-groups@yahoo.com on May 6, 2008, 10:43 pm
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> I am suing a professional for actual damages. When I win, will the proceeds
> be taxable, since they are just to reimburse me for what I lost? Are my
> legal fees tax deductable?
It is taxable. Only specific personal injury damages are potentially
tax-free. The legal fees are deductible on Schedule A subject to the
2% limit -- only the amount over 2% of your AGI is deductible, and the
furthermore deduction is not allowed under the AMT.
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<< The foregoing was not intended or written to be used, >>
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Posted by Seth on May 7, 2008, 2:04 pm
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>> I am suing a professional for actual damages. When I win, will the proceeds
>> be taxable, since they are just to reimburse me for what I lost? Are my
>> legal fees tax deductable?
>
>It is taxable. Only specific personal injury damages are potentially
>tax-free.
Compensation for property is also tax-free, isn't it? (It's
considered a sale at a price equal to the amount received, so there
might be some tax involved.)
Seth
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<< The foregoing was not intended or written to be used, >>
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Posted by Stuart Bronstein on May 7, 2008, 5:37 pm
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>> I am suing a professional for actual damages. When I win, will
>> the proceeds be taxable, since they are just to reimburse me for
>> what I lost? Are my legal fees tax deductable?
>
> It is taxable. Only specific personal injury damages are
> potentially tax-free.
Sorry but that's wrong. It's only taxable to the extent it's income.
If someone steals your money and you sue to get it back, it's not
income. It's just getting back what you lost. Even though it's not
for personal injuries.
Stu
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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. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
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Posted by removeps-groups@yahoo.com on May 7, 2008, 8:14 pm
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> > It is taxable. Only specific personal injury damages are
> > potentially tax-free.
>
> Sorry but that's wrong. It's only taxable to the extent it's income.
> If someone steals your money and you sue to get it back, it's not
> income. It's just getting back what you lost. Even though it's not
> for personal injuries.
True. The original post says " to reimburse me for what I lost". If
this is lost wages, then I imagine it is taxable. If it is a recovery
of capital as in your stealing example, then it should not be taxable.
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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. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
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