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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16547
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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I am a class representative in a suit against a life insurance

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I am a class representative in a suit against a life insurance company. A settlement has been negotiated. Is there any tax consequences of the proceeds earned by our counsel?

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 :

When legal counsel earns fees as a result of getting a settlement, the amount is taxed as ordinary income.

Customer:

counsel may be subject to ordinary income tax, but am I, as a class representative liable to pay for any part of that tax?

MyVirtualCPA :

You don't pay tax on the fees that are earned by counsel...they do

Customer:

thank you

Customer:

accept,

Customer:

excellent

MyVirtualCPA :

If you would please take a moment to rate my response as "excellent" using the rating feature on the bottom of your screen

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