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Whatever amount is shown on the 1099 will be taxable income. The actual refund was remitted to your spouse. You can deduct the actual legal fees you paid in 2008 as miscellaneous itemized deductions on Schedule A. The other fees incurred were personal expenses and are not deductible.
But I never recieved my refund.My ex got it thru deceptive means.no differant than some one else getting it wrongly.As stated in the contract with HSBC the refund can go only into MY account,not some out of state one so legally I never recieved it.The law suit was to get my refund which was never deposited into MY account.If any one should have to pay taxes on it,it would be my ex.I still dont understand why I should have to pay taxes on a refund I never recieved.