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Awards and Settlements FAQ

March 21, 2014
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Tax treatment for medical expense reimbursements

The general rule is all items received constitute “gross income” and are taxed. However, IRC §104(a), and the corresponding Treasury Regulations, provide an important exception to […]
March 21, 2014
Updates on the Criminal Tax Cases Against Ex-Trump Associates Paul Manafort and Rick Gates

Distinction for business and investment recoveries

Often a plaintiff may receive payments to compensate for a business or investment loss caused by the defendant. These are called “business and investment recoveries.” The […]
March 21, 2014
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Default tax treatment when business owner gets settlement

The general presumption, or default, with respect to damages in a business related recovery is that they are attributable to lost profits. Basle v. Commissioner, 16 […]
March 21, 2014
FBAR Non-Compliance Results in Sanctions of $1,000 a day for a Taxpayer

Where is a payment allocation documented?

An allocation of a settlement or award payment is documented in either a judgment or a settlement agreement. However, if an allocation between lost profits and […]
March 21, 2014
House Tax Reform Plan May Jettison Section 1031 Like-Kind Transfer Tax Benefits

What is the tax benefit rule and its significance?

Under the so-called “tax benefit rule”, a taxpayer need not include in his gross income (and therefore need not pay tax on it) amounts recovered for […]
March 21, 2014

What is tax indemnification agreement. Consequences?

Sometimes a person or a business will compensation another for paying the tax liability of the former. An agreement for this arrangement is called a tax […]