Yes. I could not include all relevant info in 170 characters. Here is a summary without text limitation.
In 2008, I was laid off from my employer and was paid a severance of $160,000 which I accounted for as income on my 2008 taxes. Nine months later, my ex-employer went bankrupt. The bankruptcy receiver sued me to repay my entire severance (which is legal under bankruptcy laws). I settled this lawsuit in 2019 and repaid $16,000. My belief is the $16,000 repayment is not a legal expense but “contra-income” or a reversal of income and should be deductible on Schedule A line 21. IRS Publication says income recoveries should be added on line 21 so why shouldn’t income reversals be deducted? Just because my situation is not dealt with in the publication does not mean it is not legal and justified.
limitation.
