Taxation of Settlements and Judgments in Civil Litigation (Live Replay from January 12, 2022)

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Two of the questions clients have about settlements are: Is the settlement taxable? And if so, how is the settlement treated for tax purposes? The answers to these questions turn on the nature of the underlying claim(s) giving rise to the settlement.

Some settlements are taxed as ordinary income, subjecting income tax and employment tax withholding in certain instances. Other types of settlements are taxable as capital gains. There are also questions related to the treatment of that portion of the settlement, if any, attributable to attorneys' fees.

This program provides a practical guide to the tax treatment of settlements in civil litigation.

How the underlying claim giving rise to a settlement determines its tax treatment
Loss of income or gross business profit v. destruction of capital property
Special treatment for physical injury
Treatment of portion of settlement attributable to attorneys’ fees
Income and employment tax withholding from settlements

Contributors

Stephen J. Turanchik

Stephen J. Turanchik is an attorney in the Los Angeles office of Paul Hastings LLP, where his practice focuses on tax litigation at the state and federal levels as well as tax controversy work at the administrative levels.

Before entering private practice, Stephen is previously litigated for six years for the U.S. Department of Justice, Tax Division, where he litigated over 300 tax cases in federal, bankruptcy, state and probate court. He has also lectured at Loyola Law School and California State University, Fullerton on topics relating to tax litigation and is chair-elect of the executive committee of the Los Angeles Bar Association's Tax Section.

Stephen received his B.A. from the College of the Holy Cross, his J.D. from Fordham University School of Law, and his LL.M. in Taxation from New York University School of Law.

Click here for more information about Stephen.

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Description

Contributors

Stephen J. Turanchik