Taxation of Lawsuits, Awards, and Settlements

CPAs, EAs, CRTPs

This course describes the various tax consequences that arise when the taxpayer receives or pays a lawsuit judgment, award, or settlement. Both gross income inclusion rules and tax deduction issues are discussed and illustrated with examples from case law and IRS rulings. The payment of attorney’s fees is also covered extensively. After taking this course you should be able to accurately assess the tax ramifications of damages and settlements received or paid by your clients and assist your client and counsel representing your client in structuring lawsuits and settlement agreements.

• Identify damage awards and settlements that are taxable
• Recognize which legal expenses are deductible
• Choose appropriate approaches to settling legal disputes to achieve favorable tax consequences
• Describe how to report attorney’s fees with respect to legal disputes
• Identify the tax consequences of divorce, contract, and other types of legal cases