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We received a lawsuit settlement in 2015. We did not receive a 1099 misc. for this money. Should we have? I am doing our taxes in Turbo Tax and as I try to account for the income, it requires a tax id which I don't have.
A few details. It was a contingency lawsuit so the ins company mailed the check to our attorney. He held out his fee and cut us a check for the remainder. I thought he should have sent us one so I asked and his response was that was an accounting question and not a legal one. I should ask our accountant. He is less than competent so I'm hoping someone here can help.
You purchased property which lost value (due to factors related to a breach in contract) and you were compensated for that lost value on your original investment. I'm not entirely sure it is taxable. I would consult with a CPA and/or tax attorney.
Is it business related or personal? If it was related to your business it should flow through your Sch. C, probably in block 6 (assuming your business is not a partnership or S-Corp, in which case it would need to go on the business tax return). If it is personal, I'd put it in block 21 of the 1040 and describe it as lawsuit settlement.
You probably should consult with a tax professional with the specific details, however, and let them figure out what needs to be done based on all relevant factors. This settlement will most likely also affect your basis in the property.
It's a personal residence we turned into a rental 2 years ago.
Also, Now I'm thinking it may not be taxable.
"Settlement awards that compensate you for property loss can be excluded if they do not exceed your adjusted basis in the property. Your basis in property is the amount that you paid to acquire it -- for real estate, for example, it might be the amount you paid for the property, plus real estate broker's fees. Your adjusted basis represents any change in your basis over time -- depreciation, for example, or the value of improvements that you added. If the amount of your compensation exceeds your adjusted basis in the property, you are taxed at capital gains tax rates on the amount by which your compensation exceeded the adjusted basis in the property."
If I didn't receive a 1099 misc then it's not being reported to the IRS right? Because if it is, I would rather claim it then have them come back and argue the point.
I am going to see if I can find an accountant to help with this question but hope someone here can.
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