Does the IRS treat a settlement under the Washington State Consumer Protection Act as taxable income?

Does the form of the settlement have any impact on the tax status?

Redmond, WA -

Attorney Answers (2)

Pamela Koslyn

Pamela Koslyn

Business Attorney - Los Angeles, CA

The IRS treats almost everything as income, with a notable exception for "personal injuries or sickness." See I.R.C. section 104 for exclusions from gross income.

Avvo doesn't pay us for these responses, and I'm not your lawyer just because I answer this question or respond to... more
Stephen Scott Pearcy

Stephen Scott Pearcy

Tax Lawyer - Sacramento, CA

Any portion you received that reflects an amount that "makes you whole" again wouldn't be taxable, but any other part, such as the punitive component, would be taxable.

Related Advice

Questions? An attorney can help.

Ask a Question
Free & anonymous.
Find a Lawyer
Free. No commitment.