Lawsuit Settlement ?

[Eli]

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

[Jade06]

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!!

[Eli]

Jade, thank you for...

your reply.

Eli

[MAMalody]

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

[George Boutwell]

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?