I made a $12,000 down payment for a chairlift that was never installed. I eventually sued the business and won a judgement of $100,000 plus attorney fees. If I ever receive payment, will the $12,000 return of my down payment be taxable to me?
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Damages representing your actual losses are not taxable. I can't imagine how you got $100,000 from a $12,000 down payment, but if you don't have other losses (damage to your home for incomplete work, for example) then the remaining portion will be taxable. And unfortunately, you can't deduct your attorney fees. So if, for example, you actually receive $50,000 net (half the judgement) after attorneys and fees, you will still have to report and pay taxes on $88,000.
No ... it is just a return of your own money.
Damages representing your actual losses are not taxable. I can't imagine how you got $100,000 from a $12,000 down payment, but if you don't have other losses (damage to your home for incomplete work, for example) then the remaining portion will be taxable. And unfortunately, you can't deduct your attorney fees. So if, for example, you actually receive $50,000 net (half the judgement) after attorneys and fees, you will still have to report and pay taxes on $88,000.
Thank you for such a complete answer.
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