That depends. What is the origin of the claim? That is, what was the basis for the lawsuit against your business. Was it because you had failed to pay rent? Was it for damage to the property? If you can provide a little more detail about nature of the claim, then we can provide some guidance on how you should report the judgement payments on your tax return.
Generally, payments that arise out of a business activity are deductible as business expenses; however, based on the nature of the lawsuit, certain payments may have to be capitalized. If there were multiple underlying claims in the lawsuit, then some allocation of expenses may be required.
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