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Tax

Sep. 24, 2024

Settlement agreements without tax language ask for trouble

Proper settlement agreement wording is crucial to avoid tax issues and ensure favorable tax outcomes.

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Almost every settlement includes a full release of claims, with the plaintiff compensated for relinquishing all rights. A release may recite some of the plaintiff's claims, but it is predictably broad. It might say any taxes on the settlement are solely the plaintiff's responsibility, but should it say more?

If there is a chance to add tax language to the release before signing, take advantage of it. It should not be a tough sell to convince the parties-...

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