Hi,...Yes, this is taxed as interest to the estate....Under the origin of the claim doctrine, awards and settlements are taxable based on what the settlement was in lieu of. (pardon the grammar)....I would record as interest because of the distinction between back pay and interest ON unreceived back pay....Attorneys fees, by the way, are deductible
here, unless the award or settlements was received net of the fees....Let me know if you have questions..Lane....I hold a law
degree (JD, Juris Doctorate), with concentration in Tax Law, Estate law & Corporate law
, an MBA, with specialization in finance & tax, as well as CFP® and CRPS
designations. - I’ve been providing financial, Social Security/Medicare
, estate, corporate & tax advice since 1986.