Forbes has published an article, “Tax Rules Your Lawyer Might Not Know,” which discusses tax rules for settlement agreement . The article begins as follows:
Many lawyers are asked about tax issues, at least in a general way. For example, clients may ask whether legal fees they pay are tax deductible. Unfortunately, many tax issues are complex, even tax deductions for legal fees. Except for tax lawyers, many lawyers try to steer clear of tax questions. Still, many lawyers want to have some tax knowledge, so they know when there are tax dangers, and when to suggest that clients should get some tax advice of their own. For lawyers that handle disputes and litigation, any time money changes hands there are bound to be tax issues on some level. The overwhelming majority of disputes settle, and the tax planning opportunities are better with settlements than with cases that go to judgment. A judgment is absolute, and if you’ve gone to trial, you usually don’t have the time or the opportunity to try to shape any tax wording in a judgment.
Click here to see full article: “Tax Rules Your Lawyer Might Not Know.”
Posted by Bella Hoang, Managing Associate Editor, Wealth Strategies Journal.