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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12686
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I'm the administrator of my deceased mother's class action

Customer Question

I'm the administrator of my deceased mother's class action suit (Actos). What tax form do I need to submit?
JA: The expert will know how to help. Please tell me more, so we can help you best.
Customer: My mother passed in 2008 - her husband/my father died in 2014. The class action suit is now settled & I have received a check to disburse among children. What form does the IRS want me to submit?
JA: Is there anything else the expert should be aware of?
Customer: My mother's death was related to the drug - hence the class action lawsuit.
Submitted: 2 months ago.
Category: Tax
Expert:  Lane replied 2 months ago.

Hi. My name's Lane.

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I hold a law degree (J.D.), with concentration in Tax Law, Estate law & Corporate law, an MBA in finance, a BBA, and CFP & CRPS (Chartered Retirement Plans Specialist) designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice on three continents since 1986.

Bear with me a moment and I’ll provide my initial response, and then we can go from there if you have further questions on this.

Expert:  Lane replied 2 months ago.

Any lawsuit (award OR settlement) that is based on physical injury, sickness, or wrongful death is NOT taxable.

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The IRS recognizes settlement money from cases involving “observable bodily harm” as tax-exempt under part 26 U.S.C. § 104(a) of the tax code.

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Actos was proven to cause physical illness, bodily harm & death, so this is tax-exempt.

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Expert:  Lane replied 2 months ago.

See this from IRS Publication 4345:

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" If you receive a settlement for personal physical injuries or physical sickness and did not take an itemized deduction for medical expenses related to the injury or sickness in prior years, the full amount is non-taxable. Do not include the settlement proceeds in your income."

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(https://www.irs.gov/pub/irs-pdf/p4345.pdf)

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Thanks,

Lane