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    Lawsuit Settlement ?

    Client received 1099 Misc Box 3 income $49,602. Income was for a lawsuit related to soil contamination. Attorney fees were $21,291. Can the attorney fees be deducted and if so where on the Sch A can they be listed?

    Thanks!

    Eli

    #2
    Taxbook page 4-26 has the deduction requirements for the legal expences deduction. I'm assuming your clients paid those expences in order to collect taxable income if so then I would see no problem with them claiming it. Again though read the requirements. Since I don't have all of the info.

    Jade!!

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      #3
      Jade, thank you for...

      your reply.

      Eli

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        #4
        Originally posted by Eli View Post
        Client received 1099 Misc Box 3 income $49,602. Income was for a lawsuit related to soil contamination. Attorney fees were $21,291. Can the attorney fees be deducted and if so where on the Sch A can they be listed?

        Thanks!

        Eli
        If this is a qualifying legal expenses (per the prior posting) it is deductible as a miscellaneous itemized deduction subject to the 2% AGI limitation.

        I hope this helps.

        Mike

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          #5
          Basis Adjustment?

          I would look for a way for this to be a basis adjustment (like sale of an easement), rather than income. If I contaminate your bumper with some paint from my car, do you have to pay tax on the body shop bill that I pay?

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