Upon his death we had to establish an estate in order for the lawsuit to proceed. The suit has now been settled. I'm trying to determine if we will owe taxes. The money from the lawsuit is all that the estate will have as he did not have anything other than the lawsuit.
neoplop
Legal settlement proceeds may or may not be taxable.
Usually, punitive damages are taxable, but damages for emotional distress or physical injury are not.
See Pub 525 for more info (p.31)
Orignal From: My father in law was involved in a defective medical device lawsuit (Guidant defibulator).?
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