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For income tax purposes such donations most likely should be classified as gifts.
If that is a gift - means you do not pay them back - that is not a taxable income for you.
As a recipient of a gift - you do not need to claim it as income. Regardless of the value of the gift. Please see for reference IRS publication 525 page 34 (left column)- http://www.irs.gov/pub/irs-pdf/p525.pdf
Gifts and inheritances. Generally, property you receive as a gift, bequest, or inheritance is not included in your income. However, if property you receive this way later produces income such as interest, dividends, or rents, that income is taxable to you. If property is given to a trust and the income from it is paid, credited, or distributed to you, that income is also taxable to you. If the gift, bequest, or inheritance is the income from the property, that income is taxable to you.
The donor - your relative - might be required to file a gift tax returns if the gift amount is above $13,000 per person per year (for 2010).
There will not be any gift tax unless lifetime limit of $1,000,000 is reached.
Taxpayers may claim a deduction for charitable contributions to a qualified non-profit organization.
However - to be deductible - the contributions must be made to a qualified organization and not set aside for use by a specific person.
The contribution for a specific person or that benefits a specific person may not be deducted.
Please see for reference IRS publication 526 - www.irs.gov/pub/irs-pdf/p526.pdf
If your legal expenses will generate a taxable income - they will be deductible.
Let me know if you need any help.
What do you mean by, "If your legal expenses will generate a taxable income- they will be deductible?"
The gifts from friends will only be used for legal fees, nothing additional. What would make the money qualify as taxable? Is there something I need to do or not do, as the case my be, to make sure its not taxable income?
Gifts from friends and family members - are not your taxable income - I sited above a reference to the IRS publication this matter.
If you pay legal fees - that is not your income - that are expenses.
Depending on the outcome - your litigations may result with taxable income - as a court award or a settlement. In this case - your actual legal expenses may be used as a deduction and will reduce your tax liability. So I suggest to keep track of all your legal expenses.
Sorry for confusion.