Infringement of Title Lawsuit Settlement

[dr000016]

We have been awarded a sum of money for Infringement of Title.  We have incurred a lot of legal fees to defend the rights to our property in excess of the award.   We did not receive a 1099-Misc.   Do we have to claim it as income/capital gain?    

[KrisD15]

The award for that type of lawsuit would be considered as taxable income.

Unless this is business related (where you could deduct the legal fees on your Schedule C) the legal costs are not deductible for the individual. At one time they could be reported (at a reduced amount)  on Schedule A, but that was eliminated by the Tax Cuts and Jobs Act. 

The IRS would view the income as reportable with or without a 1099-MISC. 

If the award went through your legal representative, ask them how they are reporting it. Sometimes the attorney fee is subtracted from the award amount reported on the 1099-MISC.