Legal Question in Tax Law in Tennessee

Re: Do we pay tax on settlement from sexual harassment lawsuit?

You absolutely may not rely upon my tax advice as

it varies from state to state depending upon the

state law characterization of the settlement.

As a really general rule, settlements or judgments

which are compensatory, which make you whole after an

injury of sorts, are tax free, but punitive awards,

replacement of ol' back wages, and the future wages

that she might have gotten paid if she kept the job ...

I THINK these might be considered taxable income.

However, I'm not sure on that point, either, without

checking further ... I have notes on it I could look

up, but it would apply for Massachusetts. I hope that

it gives you an idea of the structure of the answer,

if not the answer. Good luck. Ask your attorney

or your accountant and if you don't have one, get

one!!

Lawyers fees are an obvious offset (reduction) from

the income.