Accepted Answer

Yes, if this is compensation paid to you as a result of physical injury than this is not taxable.

You may want to file a form as discussed in the link below. From a plain reading of the rules it does not seem that you will qualify for the rebate. But it is worth a try,

Link

http://www.irs.gov/irs/article/0,,id=179096,00.html

 

Let me know if you have any question.

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

Expert:	RD
Pos. Feedback:	99.4 %
Accepts:
Answered:	4/7/2008

Certified Public Accountant (CPA)

CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..