Question

Received 1099misc for BP Settlement and it does not show the actual amount received after lawyer fee's etc.

Forum|Forum|7 years ago
June 3, 2019
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TurboTax Premier Online

If the amount you received in the settlement was for lost profits from your trade or business, the portion of the proceeds

attributable to the carrying on of your trade or business is net earnings subject to self-employment tax. These proceeds are taxable and should be included in your “Business income” reported on line 12 of Form 1040. If you had legal fees and other expenses related to obtaining the settlement, you would deduct those as business expenses.

If the amount received was a property settlement for loss in value of property that was less than the adjusted basis of your property it is not taxable and generally does not need to be reported on your tax return. However, you must reduce your basis in the property by the amount of the settlement.

For more information on taxation of legal settlements, see: https://www.irs.gov/pub/irs-pdf/p4345.pdf

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