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    Injured Smoker Settlement

    My guess is that it is "not taxable" ,,,,what say you.
    This post is for discussion purposes only and should be verified with other sources before actual use.

    Many times I post additional info on the post, Click on "message board" for updated content.

    #2
    BOOST........... the prior CPA was including it in income...and he is in FL where the class action took place. So I am thinking he is probably right...??? NO 1099...Just letter
    Last edited by BOB W; 04-04-2010, 11:01 AM.
    This post is for discussion purposes only and should be verified with other sources before actual use.

    Many times I post additional info on the post, Click on "message board" for updated content.

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      #3
      I found this regarding settlements, good short reading.


      The Internal Revenue Service recognizes that receiving a settlement award (amount) from a personal
      injury suit may create new tax issues for some individuals. The following information is provided to
      assist recipients of cash settlements.

      The type of settlement you receive is determined by your Final Settlement Agreement.

      Physical injuries or physical sickness settlements are generally non-taxable.

      • If you receive a settlement for physical injuries or physical sickness and did not take an
      itemized deduction for medical expenses related to this injury in prior years, the full amount is
      non-taxable and generally does not need to be reported on your income tax return.
      BUT
      • If you receive a settlement for physical injuries or physical sickness and did deduct medical
      expenses related to the injury, the tax benefi t amount is taxable and should be reported as
      “Other Income” on line 21 of Form 1040.

      Interest, punitive damages, emotional distress or mental anguish, and employment
      discrimination or injury to reputation settlements are generally taxable.

      • Interest: Amounts on any settlement are taxable as “Interest Income” and should be reported
      on line 8a of Form 1040.

      • Punitive Damages: Amounts are taxable and should be reported as “Other Income” on line
      21 of Form 1040. It does not matter if punitive damages are related to a physical injury or
      physical sickness.
      • Emotional distress or mental anguish: Amounts are taxable to the extent that they exceed
      medical costs, not previously deducted, for treatment of emotional distress or mental
      anguish. A statement showing the entire settlement amount less related medical costs should
      be attached to the return. The net taxable amount should be reported as “Other Income”
      on line 21 of Form 1040.

      • Employment discrimination or injury to reputation: Amounts are taxable and should be
      reported as “Other Income” on line 21 of Form 1040.
      Loss-of-use or loss-in-value of property settlements may be taxable if the settlement exceeds
      your basis in the property.

      • Property settlements that are less than the adjusted basis of your property are not taxable
      and generally do not need to be reported on your tax return.

      • When property settlements exceed your adjusted basis in the property, the excess is gain.
      Gains on personal capital assets are reported on Form 1040’s Schedule D, Capital Gains
      and Losses. Gains on business capital assets are reported on Form 4797, Sale of Business
      Property.

      Some settlement recipients may need to make estimated tax payments if they expect their tax to be
      $1,000 or more after subtracting credits & withholding. Information on estimated taxes can be found
      in IRS Publication 505, Tax Withholding and Estimated Tax, and in Form 1040-ES, Estimated Tax for
      Individuals.

      For additional help contact the IRS at 1-800-829-1040.
      All of the forms and publications referenced in this publication are available
      from the IRS at www.irs.gov, or paper copies can be ordered by calling
      1-800-829-3676 (1-800-TAX-FORM).
      STAKEHOLDER PARTNERSHIPS,
      EDUCATION & COMMUNICATION
      Publication 4345 (Rev. 6-2006)
      Catalog Number 38586D
      Settlements — Taxability
      Last edited by BOB W; 04-07-2010, 05:10 PM.
      This post is for discussion purposes only and should be verified with other sources before actual use.

      Many times I post additional info on the post, Click on "message board" for updated content.

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