I once had a law school acquaintance who loved being a tax attorney so much she would literally squeal, “I can’t believe they pay me to do this!” Please try to imagine the expression on my face when I heard this.
Taxes, oh now I hate thinking of taxes! It is something that casts a shadow on even the most joyous events – like winning a lawsuit. And to make it even more difficult, the IRS just had to add that unique level of bureaucracy it has become so famous for.
Did you know that the way your settlement or judgment is treated turns on the type of claim for which you sued? Robert W. Wood discusses how the IRS treats lost profits, punitive damages, interests and lawyers’ fees. If you are in the midst of (or you are planning to file a law suit), I would definitely follow Mr. Wood’s recommendation and get tax advice before filing your claim or before drafting and signing any settlement agreement.
