Taxability of Judgments and Settlements
Author: Allison McLeod
| CPE Credit: |
2 hours for CPAs
2 hours Federal Tax Related for EAs and OTRPs
2 hours Federal Tax Law for CTEC |
In the course of legal actions, payments may be made pursuant to a final disposition of a court case or a mutually agreed-upon settlement. This course will cover the tax implications for payments made for personal injury, emotional distress, lost wages, punitive awards, pre- and post-judgement interest, contract claims, among other damages.
Publication Date: February 2022
Designed For
Corporate tax and finance executives, directors, managers and staff, CPAs, CAs Enrolled Agents, accountants, attorneys and business/financial advisors who work with and advise businesses that have tax implications. All in-house and public practice tax professionals will benefit from this timely and insightful seminar.
Topics Covered
- Litigation Process
- Sec. 104(a) Generally
- Wages
- Attorneys Fees
- Other Category of Damages
- Tax Implications to Payor
- Drafting Tips
- IRS Procedure
- Additional Case Law
Learning Objectives
- Recognize how to obtain a working knowledge of the IRC, Treasury Regulations and case law governing the taxation of litigation payments
- Differentiate between types of damage payments and whether they are taxable to the recipient or deductible by the payor
- Recognize how to draft pleadings and agreements to order to allocate the payments among the different categories of damages
- Recognize how to advise clients on the most advantageous manner of categorizing settlement payments
- Differentiate which IRC Section notes that any income, property, or other benefit received is considered "gross income" unless specifically excepted or excluded
- Recognize which type of payment that is excludable from income
- Recongize which type of payment should be reported on Form W-2
Level
Basic
Instructional Method
Self-Study
NASBA Field of Study
Taxes (2 hours)
Program Prerequisites
None
Advance Preparation
None
