Accounting & Bookkeeping & Small Business Forum

Guest · Posted: Mon Nov 08, 2004 2:47 pm Post subject: Tax Question

I was asked a question about something I'm not familiar with.
They are getting some money from a settlement with their landlord. The landlord admitted he or she was wrong on terminating their contract. They were ask to sign some tax form (they didn't know which one) when they get their check. So their question is, is this money taxable and should they sign this form? I went to the IRS website to try to get some info but I'm not satisfied with what i read. (this is an individual issue not business)

Can anyone help me with this?

Guest · Posted: Wed Nov 10, 2004 7:43 am Post subject: RE: Tax Question

Settlements are taxable if it's a nonphysical injury. That would include damages paid on account of personal injuires which are not physical injuries -- discrimination, breach of promise, invasions of privacy, libel, slander, defamation, harassment. This looks like a breach of promise. However, you should be able to deduct any costs associated with the move, if any, up to the settlement amount.

Guest · Posted: Thu Nov 11, 2004 8:01 am Post subject: RE: Tax Question

Bryan: I would have to disagree with you on this one. Thehandling of a deduction for attorney fees is dependent on which circuit the person is in.