Tax,
Law Practice
Oct. 30, 2020
Sometimes, legal settlements are taxed as capital gain
Legal settlements are usually taxed as income, and they are usually ordinary. That is the IRS default position. But the IRS is not always right, as we shall see.
Robert W. Wood
Managing Partner
Wood LLP
333 Sacramento St
San Francisco , California 94111-3601
Phone: (415) 834-0113
Fax: (415) 789-4540
Email: wood@WoodLLP.com
Univ of Chicago Law School
Wood is a tax lawyer at Wood LLP, and often advises lawyers and litigants about tax issues.
Legal settlements are usually taxed as income, and they are usually ordinary. That is the IRS default position. But the IRS is not always right, as we shall see. For example, a suit about intellectual property might produce capital gain when it settles. So might a case about a landlord-tenant dispute, where the tenant is bought out of a lease. A suit about damage to or conversion of property? That might be capital gain too.
So might...
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