@NSL89 wrote:
Hi @LenaH ,
What amount do I declare to offset the amount if .. ?
Total Settlement: $70,000 ($25, 702.49 actual damages + $44,297.51 additional damages) + attorneys' fees
Recovery for total damages: $25, 702.49
Recovery from additional damages: $24, 363.63 ($44,297.51 - $19,933.88 45% retainer agreement)
Attorneys' Fees and Cots: $19,933.88 + $41,500
Total to the client: $50,066.12
In addition, FCA claimed $88,716.49 in the 1099-MISC fee, which includes attorneys' fees that I did not receive.
Thank you for your help.
Thank you for the help.
The taxable amount of any lemon law settlement is the amount that the payment was more than your original purchase price. The offset would be whatever figure is necessary to make the net taxable amount equal to whatever was in excess of the purchase price. The entire settlement must be considered, including attorney fees. The entire settlement is income to you, and you are not allowed to deduct the attorney fees if this was a personal vehicle. (You may be able to deduct attorney fees if this was a business vehicle, but the calculation of the taxable portion would be completely different as well.)
You did not provide the purchase price, so I can't give you an answer.
