Is (value of) anti-theft device received in class action settlement taxable as income?

Forum|Forum|1 year ago
September 12, 2024
1 reply
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According to "Are legal settlements taxable?" at https://ttlc.intuit.com/turbotax-support/en-us/help-article/legal-issues/legal-settlements-taxable/L3nHlAmXd_US_en_US, "Legal settlements are often taxable".

As part of a class action settlement with a car company, I received an anti-theft device.

Is that considered taxable income?

Opus 17

Level 15

I would say no, because:

Compensation for injury or property damage is not taxable unless the compensation is more than the cost of the injury or property. I would say in this case that the car has lost a considerable amount of resale value (or was worth less than you paid) because of a defect in its design, and the value of the free antitheft device is far less than the lost value of the car, so the theft device is not taxable.