How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Megan C Your Own Question

Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 15302
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
23669918
Type Your Tax Question Here...
Megan C is online now
A new question is answered every 9 seconds

is a lawsuit money received for the lost of a safe deposit

Resolved Question:

is a lawsuit money received for the lost of a safe deposit box taxable?
Submitted: 1 year ago.
Category: Tax
Expert:  Megan C replied 1 year ago.

MyVirtualCPA :

Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.

MyVirtualCPA :

How are you today?

MyVirtualCPA :

I'm sorry to hear about your safety deposit box.

MyVirtualCPA :

To the extent that the proceeds are to reimburse you for property that you already had, that is not taxable

MyVirtualCPA :

If any of the proceeds are punitive in nature then that is taxable

MyVirtualCPA :

Is there anything else I can help you with?

Customer:

thank you. I didn't report this amount received as I was told it was not taxable. I received a notice from the IRS stating this bank had reported this settlement as income received. The only thing I can think of is this bank sent in a 1099 (I rec'd nothing in the mail from this bank) instead of the proper form. Do you have this form #? Also, the IRS has stated I must send them $39,000 by 5/22/13. Is this true?

MyVirtualCPA :

I can't speak about your personal situation, but if the lawsuit proceeds are to compensate you for property that you lost, it is not taxable.

MyVirtualCPA :

The 1099 would be the proper form for them to send in.

MyVirtualCPA :

What you need to do is go to a local tax preparer such as a CPA, attorney, or EA and have them look over your lawsuit documents and prepare an explanation to the IRS about why this money is not taxable.

MyVirtualCPA :

Would you rate my service as excellent today?

Customer:

I sent a copy of the lawsuit to the IRS as well as the distribution list. the settlement was for all the lost jewelry. I included a letter to the IRS concerning all the details. I thought a 1099 was used for "earned income". The settlement was not "earned income: there is another form of which I do not know the # XXXXX is used for settlement money received.

MyVirtualCPA :

There is no form other than 1099 that the bank could use to report the income.

MyVirtualCPA :

However, just because the IRS got a 1099 does not make it taxable

MyVirtualCPA :

You would need a letter written by a tax professional outlining the reasons why this is not taxable income. SImply sending them a copy of the lawsuit would not be helpful, unfortunately. The IRS needs an explanation.

MyVirtualCPA :

1099-MISC is used for a variety of purposes, not just earned income.

Customer:

ok. however, I did send them a letter explaining in detail, the circumstance. This has turned into a nightmare for me. Thank you for your time.

MyVirtualCPA :

You're welcome and I'm sorry that you are going through this. Unfortunately, you would have to speak IRS language to them. A professional can make much more progress with this issue, and given the $39,000 at stake I think it would be money well spent.

MyVirtualCPA :

I'm sorry I can't personally help you write a letter, but we are prohibited from giving opinions and are limited to providing only general information on this site.

MyVirtualCPA :

If satisfied with our communication, please rate my response as "excellent" so that I may receive credit for assisting you today.

Customer:

I completely understand your position and yeas, I will rate you as excellent. Thanks again.

MyVirtualCPA :

You're welcome. Have a great night and I wish you the best of luck. A professional will fight for you on this, and as I said it would be money well spent.

Customer:

one last question, if that's ok? i don't have the $39,000 as most of my $ is tied up in secured deposits. is there any way i can pospone this demand for pmt?

MyVirtualCPA :

Yes, you don't have to pay while this is in dispute

MyVirtualCPA :

penalties and interest will continue to accrue, but if it's found it's not taxable everything - including penalties and interest would go away.

MyVirtualCPA :

And if it is, worst case scenario, found that you did owe the tax, you could spread the payments over 72 months

Customer:

so, i should send back the notice and mark "i do not agree with the ird decision?

MyVirtualCPA :

Yes you can do that

MyVirtualCPA :

And call the 1-800 number on the notice and ask for an extension because you are getting a tax professional to look over everything

Customer:

thank you again!!

MyVirtualCPA :

You're welcome

MyVirtualCPA :

Have a great night

Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 15302
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
Megan C and 4 other Tax Specialists are ready to help you

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.