James Edward Maule, MauledAgain (June 14, 2021): Words Matter: The Tax Treatment of Legal Malpractice Awards

James Edward Maule’s MauledAgain tax blog entry discusses Holliday v Comr.,T.C. case. His article, “The Tax Treatment of Legal Malpractice Awards” includes the following commentary:

A recent Tax Court case, Holliday v. Comr., T.C. Memo 2021-69, addressed the tax treatment of a legal malpractice award. In March 2010, the taxpayer’s then husband filed for divorce. The taxpayer retained J. Beverly as her attorney, and after she and the attorney engaged in mediation, she executed a settlement agreement. She objected to the agreement, though it is not clear why she objected to an agreement to which she had agreed and which she had signed. In April 2012, the divorce court entered the decree of divorce. The next month, Beverly filed a motion for a new trial, alleging that the taxpayer received $74,864 less than her equal share of the community estate. That motion was denied. Beverly told the taxpayer he would appeal, but he did not do so.

To see the full article, click: “Words Matter: The Tax Treatment of Legal Malpractice Awards.”
To download the full opinion, click: “Words Matter: The Tax Treatment of Legal Malpractice Awards.”

Posted by Bella Hoang, Managing Associate Editor, Wealth Strategies Journal.

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