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I have a settlement agreement for an FCRA violation case. Is

 
PaulMJD's Avatar
  • Answered by:PaulMJD
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I have a settlement agreement for an FCRA violation case. Is the settlement award taxable, as in the loser has to submit a 1099 on the settlement amount (it's over $600).
Please see TITLE 26 - INTERNAL REVENUE
CHAPTER I - INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY
SUBCHAPTER A - INCOME TAX
PART 1 - INCOME TAXES
1.104 - 1 - Compensation for injuries or sickness.
Section 104(a)(2) excludes from gross income the amount of any damages received (whether by suit or agreement) on account of personal injuries or sickness. The term damages received (whether by suit or agreement) means an amount received (other than workmen's compensation) through prosecution of a legal suit or action based upon tort or tort type rights, or through a settlement agreement entered into in lieu of such prosecution.

 

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State/Country relating to question: Arkansas

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Submitted: 235 days and 20 hours ago.
Category: Real Estate Law
Value: $25
Status: CLOSED
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Expert:  PaulMJD replied 235 days and 20 hours ago.

The award from the FCRA suit is an award for injuries you suffered because of their violation. Thus, these types of awards are not taxable as income.


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Customer replied 235 days and 20 hours ago.

I was hoping you'd say that! Any chance you have any case law to back that up? I am assuming the defendant is going to challenge me on that.

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Expert:  PaulMJD replied 235 days and 20 hours ago.

There is nothing for the defendant to challenge, let them give you a 1099 and your tax preparer will explain it on your tax return as it being exempt income. This is a damage for injury and it is between you and the IRS, do not worry the defendant wants to file a 1099 as that would be handled in your tax return as damages for personal injury received.

Expert TypeLawyer
Category: Real Estate Law
Pos. Feedback: 99.0 %
Accepts: 6557
Answered: 8/20/2012

Experience: Licensed attorney practicing landlord-tenant, land use and other real estate law and litigation.

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