Lemon Law Settlement

[mattorion]

I am in CA.

Received a repurchase settlement for my lemon vehicle.

The amount is even to the FMV, before attorneys fees are included. After attorney fees are included, it is more.

Does this mean I have to pay the taxes for the attorney fees? Where in turbo tax should I report these numbers?

Ive read about entering positive and negative numbers to offset each other. Or should I simply list the attorney fees on their own? Or should I do nothing?

thank you very much. I am quite confused by the conflicting replies.

[ThomasM125]

If you didn't receive a 1099 form reporting the receipts, you can simply add the income represented by the excess attorney fees as Other Income as follows:

1. Start in the Federal section of TurboTax

2. Look in Wages and Income and find the Other Common Income section

3. Choose Miscellaneous Income, 1099-A, 1099-C

4. Choose Other reportable income 

5. Enter a description for the income and the amount

If you received a form 1099-MISC, you will need to enter it as follows:

1. Start in the Federal section of TurboTax

2. Look in Wages and Income and find the Other Common Income section

3. Choose Income from Form 1099-MISC

4. Complete the Form 1099-MISC entries and answer the questions designed to determine the best way to report the income on your tax return