Charles

[charlesray]

Re: Class action settlement Allapattah versus Exxon.

Client actually received 99M in settlement. Got a 1099-INT for 52m and a lot of gobblygook from the law firm. I think only the 1099 amount is taxable due to the class action nature of the lawsuit..

Please give me your opinion.

Thanks,

Charles Ray, the Texas Hammer

[Davc]

Re: Class action settlement Allapattah versus Exxon.

Client actually received 99M in settlement. Got a 1099-INT for 52m and a lot of gobblygook from the law firm. I think only the 1099 amount is taxable due to the class action nature of the lawsuit..

Please give me your opinion.

Thanks,

Charles Ray, the Texas Hammer

The "class action nature" of the lawsuit has no bearing on whether or not it's taxable.

[DaveO]

Why a 1099INT?

Was it interest paid on the settlement amount? I would think a 1099MISC would have been issued first. Why was the settlement paid? That answer will determine what is taxable.

[taxmandan]

The "class action nature" of the lawsuit has no bearing on whether or not it's taxable.

TTB, pg 3-20: Class Action settlements for consumer goods or services as NOT taxable income unless deducted in an earlier year. The amount on the 1099INT may be the interest accrued during time up to disbursement of the funds.

[Brad Imsdahl]

TTB, pg 3-20: Class Action settlements for consumer goods or services as NOT taxable income unless deducted in an earlier year.

Not all class action settlements are for consumer goods or services. TTB is talking about you buy a toaster for $15. Somebody sues because of an electrical fire. The judge brings everyone and anyone who ever bought that toaster into the case under a class action settlement. Your share of the settlement is 27 cents. The 27 cents is not taxable because it is considered like a rebate on the $15 purchase.

Not all class action settlements are like the above example. You can't just assume it isn't taxable simply because it was a class action settlement.

[Brad Imsdahl]

Client actually received 99M in settlement. Got a 1099-INT for 52m and a lot of gobblygook from the law firm.

Just curious...what do you mean by 99M?

99 million?

99 thousand?

9,900?

990?

or

99 Millimeters?

[Davc]

TTB, pg 3-20: Class Action settlements for consumer goods or services as NOT taxable income unless deducted in an earlier year. The amount on the 1099INT may be the interest accrued during time up to disbursement of the funds.

However, the same would be true if it was a single consumer suing someone. The "class action" nature of the settlement is not what makes the difference. The examples on 3-20 need to be read in the context of the first sentence following Other Claims:

[charlesray]

charles

it is 99 thousand.