Looking for clarification on Lemon Law Settlements and what amount is taxed. Overall settlement amount is $40,000 in which $22,000 is my loss and $18,000 is under additional damages. Of the $18,000 my lawyer gets $8,100 (45%) and I receive $9,900 (55%). Will I be taxed on the full $18,000 or just the $9,900? If taxed on the full $18,000, is the $8,100 that my lawyer takes deductible?
