Tax,
Law Practice
Oct. 21, 2021
Another settlement taxed because of a poor settlement agreement
The tax treatment of lawsuit settlements can depend on the wording of the settlement agreement. For example, Debra Jean Blum received a $125,000 settlement from a lawyer who botched her personal physical injury suit. Had she recovered in the original injury suit, that money would have been tax free. But she sued her lawyer for flubbing the suit, and she received an IRS Form 1099 for her settlement.





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.
The tax treatment of lawsuit settlements can depend on the wording of the settlement agreement. For example, in Blum v. Commissioner, T.C. Memo. 2021-18. Debra Jean Blum received a $125,000 settlement from a lawyer who botched her personal physical injury suit. Had she recovered in the original injury suit, that money would hav...
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