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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.

See more...

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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