Lawsuit Award

[Aviator]

Client received a check in year 2006 from attorney as award resulting from a class action lawsuit. No physical injuries or punitive damages involved. Litigants brought action against building contractor who failed to perfrom work for which contractually responsible. At this point in time no Form 1099 MISC has been received from attorney.

I believe this to be taxable income, but would sure appreciate a second (or third) opinion.

Thanks

Aviator

[taxmandan]

Was any of it a recovery of a deposit, or other payments made to the contractor for work not performed? I believe only the amount above any recovery of invested money would be taxable.

[Aviator]

Was any of it a recovery of a deposit, or other payments made to the contractor for work not performed? I believe only the amount above any recovery of invested money would be taxable.

Hmmm, good point. Perhaps it turns on whether there is a basis involved? Thank you taxmandan, I will get back to the client and obtain more informtion. I appreciate your quick response.

Aviator