Is restitution paid in a legal case tax deductable?
As part of a legal settlement in 2004, a family member had to pay $25,000 in restitution to an former employer. Can she deduct the $25,000? (Does she need to send the recipient a 1099-misc?)
Asked on 1/31/05, 10:07 am
1 Answer from Attorneys
Barbara Lamar
Law Office of Barbara Lamar
Re: Is restitution paid in a legal case tax deductable?
If the law suit had to do with the business, then it should be deductible as a business expense.
Yes, you should file Form 1099. In general, damages paid in connection with lawsuits are reported in box 3 on Form 1099-MISC.
Answered on 1/31/05, 12:18 pm
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