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New Member

Payment of professional insurance claim taxable?

I am a self employed sales rep. One of my suppliers never payed me. I won a judgement against him and he filed for Chapter 7. I have professional insurance and submitted the claim to them as an uncollectable acct receivable. If they pay the claim is the payment a taxable event? I was not able to deduct the nonpayment of receivables on my taxes as I use cash basis. I look forward to anyone's comments. Thanks

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Level 15

Payment of professional insurance claim taxable?

Yes it is taxable ... they paid you instead of the client ... either way you still got paid. The prior uncollectible acct is now collected via the insurance payout.... they will most likely be sending a 1099-misc for that income. 

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7 Replies
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Level 15

Payment of professional insurance claim taxable?

Yes it is taxable ... they paid you instead of the client ... either way you still got paid. The prior uncollectible acct is now collected via the insurance payout.... they will most likely be sending a 1099-misc for that income. 

View solution in original post

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Level 12

Payment of professional insurance claim taxable?

what type of insurance reimburses you for uncollectable acct receivables?  I don't remember seeing that as something my business insurance covers, is this something extra you need to add?
♪♫•*¨*•.¸¸♥Lisa♥ ¸¸.•*¨*•♫♪
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New Member

Payment of professional insurance claim taxable?

I have Hartford professional liability ins. It has a clause that will pay for uncollectable accts receivable
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New Member

Payment of professional insurance claim taxable?

It was a standard clause. I did not pay extra for it. I'm waiting for Hartford to reply to my claim.
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Level 12

Payment of professional insurance claim taxable?

Interesting...I'll have to read my policy closer!  thank you!
♪♫•*¨*•.¸¸♥Lisa♥ ¸¸.•*¨*•♫♪
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New Member

Payment of professional insurance claim taxable?

I rec'd a call back from the claims agent. This would not be a covered loss. The loss would have to be a result of something like a fire etc. that destroyed your records or something like that. It was worth a try. Thanks
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Level 12

Payment of professional insurance claim taxable?

Thank you for confirming this.
♪♫•*¨*•.¸¸♥Lisa♥ ¸¸.•*¨*•♫♪
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