Taxation of Litigation Awards and Deductibility of Attorneys’ Fees
We are frequently asked about the tax consequences of receiving a judgment or settlement in a lawsuit. Damages received as the result of a breach of contract or property damage have always been, and continue to be, taxable. For personal injury actions, however, the tax consequences have changed quite a bit over the last 20 years. Prior to 1996, if someone received an award for personal injuries, other than punitive damages, all amounts received were not taxable and/or were excluded […]
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