On Aug 14, 6:12 pm, Stuart Bronstein <spamt...[at]lexregia.com> wrote:

- quote -

How does one make a reasonable allocation? Would it involve more
services from a lawyer and thus more fees for them?

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In article <g82jm0$2c7$1[at]snarked.org> ,
D. Stussy <replies[at]newsgroups.kd6lvw.ampr.org> wrote:

- quote -

Given that one payment, for the injury, was paid by the employer's
workman's comp insurance carrier, and the other payment, in settlement
of the wrongful termination claim, was paid by the employer, I would
think the allocation is obvious.

Seth

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"D. Stussy" <spam[at]bde-arc.ampr.org> wrote:
- quote -

In this case apparently an allocation has been made. It was apparently
made by the insurers that would make the payments and not reflected in
the settlement agreement. If that allocation is reasonable, I don't
see why it wouldn't be respected.

Stu

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"Alan" <sfcnm-mtm[at]yahoo.com> wrote in message
news:ei_ok.34479$co7.4508[at]nlpi066.nbdc.sbc.com...
- quote -

The OP stated that there were TWO causes of action:
- the injury (a workman's comp claim)
- wrongful termination.

Amounts paid for the wrongful termination are in lieu of [lost future]
income and are fully taxable.

An allocation needs to be made, and without an allocation, it is all
taxable.

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Alan <sfcnm-mtm[at]yahoo.com> wrote:

- quote -

I have to agree with your conclusion. There was a reasonable
allocation, though not in the settlement agreement, and it should be
honored.

Stu

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Alan wrote:
- quote -

I see nothing in any tax court cases or appeals court cases that
require a settlement agreement to specifically identify the
personal injury amount in order for the taxpayer to exclude the
amount paid.

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D. Stussy wrote:
- quote -

court decisions in Stocks (98 TC 1) and Metzger (88 TC 834) deal
with settlement agreements and allocations. In both instances
there was a single payment made to settle the plaintiffs claims.
These cases form the basis that one looks to the intent of the
payor in settling the claim. In both those cases, the court
divided the amount between the taxable and nontaxable pieces. In
this instance, we also have more than one claim. I.e., workers
compensation and retaliation. However, we do not have one payment
that has to be allocated. We have two payments. One payment made
by the employers insurance company for workers compensation and
one payment by the company for the retaliation claim. The
settlement agreements in both referenced cases made no mention of
or allocated any amount to the nontaxable part of the claim.

I have to conclude, that when one files a claim for workers comp
and receives payment from the WC insurance company to settle that
claim, you have excludable income. There is no need to make any
allocation in this instance and there is no requirement that any
settlement agreement state that the payment was or was not for
personal injury.

I see nothing in any tax court cases or appeals court cases that
require

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"D. Stussy" <spam[at]bde-arc.ampr.org> wrote:

- quote -

I believe that if the complaint had only one cause of action, and
recovery under that cause of action would not be taxable, no allocation
is required. But if there are causes of action some of which would
result in taxable income and some of which would result in non-taxable
income, failure to allocation would definitely be a problem.

Stu

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"Alan" <sfcnm-mtm[at]yahoo.com> wrote in message
news:bRGok.18158$mh5.17101[at]nlpi067.nbdc.sbc.com...
- quote -

The settlement itself allocates ZERO to worker's comp (by omission). The
claim never matured but was agreed to be aborted WITHOUT regard to its
nature or origin. Note also the word "solely." That specifically excludes
all other reasons, even those in the originating claim.

You've been told how the courts (Tax Court and Court of Federal Claims) rule
on settlements that don't have any allocation of payments to any type of
excludible income. It's not my personal opinion. It's case law repeated ad
nauseum.

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D. Stussy wrote:
- quote -


"Taxpayer reached a settlement of his workman's comp benefit
claim and received payment of that claim directly from the
municipality's insurance carrier."

His next paragraph relating to the employment based claim said:

"Taxpayer and the municipality agreed on a cash payment amount to
settle the retaliatory termination claim. Per the settlement,
the payment was made, "...solely in order to compromise and
purchase peace, to avoid the vexation and expense of litigation,
and does not and is not to constitute an admission of any
liability, but on the contrary is being paid with the express
understanding of the denial of any liability."

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"Seth" <sethb[at]panix.com> wrote in message
news:g7v2d1$qf6$1[at]reader1.panix.com...
- quote -

I reconcile it easily. From the OP's post:

'... [T]he payment was made, "...solely in order to compromise and purchase
peace, to avoid the vexation and expense of litigation, and does not and is
not to constitute an admission of any liability, but on the contrary is
being paid with the express understanding of the denial of any liability."'

I don't see any mention that the payment is to satisfy any workman's
compensation claim. The payor is also specifically stating that they DENY
any such claim.

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In article <g7tb8n$lid$1[at]snarked.org> ,
D. Stussy <replies[at]newsgroups.kd6lvw.ampr.org> wrote:
- quote -

How do you reconcile that statement with the first quoted paragraph
above? Settlement of a workman's comp benefit claim is surely
workman's comp, is it not?

Seth

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"Seth" <sethb[at]panix.com> wrote in message
news:g7spj0$ran$1[at]reader1.panix.com...
- quote -

None of the amount paid is marked as workman's comp. Therefore, none of it
is.

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Aug 12, 3:50*pm, se...[at]panix.com (Seth) wrote:
- quote -

Workman's comp is excludible by statute.

**BEGIN QUOTE**
104(a) IN GENERAL. --

Except in the case of amounts attributable to (and not in excess of)
deductions allowed under section 213 (relating to medical, etc.,
expenses) for any prior taxable year, gross income does not include --

104(a)(1) amounts received under workmen's compensation acts as
compensation for personal injuries or sickness;
**END QUOTE**

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In article <g7ihgs$kic$1[at]snarked.org> ,
D. Stussy <replies[at]newsgroups.kd6lvw.ampr.org> wrote:
- quote -

Isn't the workman's comp payment, by definition, for compensation for
the personal injury?

Seth

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"Paultry" <afn02552at[at]afn.org> wrote in message
news:UrGdnStTxfC4bQPVnZ2dnUVZ_q3inZ2d[at]centurytel.net...
- quote -


I am of the opinion that NOBODY is wise if they think they can "have
confidence in and rely on the advice and counsel of his attorney". If this
guy had no reason to consider the tax implications, why is he doing so now?
Why didn't he just make an assumption, and file his taxes?

And, FWIW, my comments are made "by a licensed professional".

and, also, I see no reason why the attorney should not be held to a
malpractice claim on this matter, but I bet he cannot be, if that was not
his area of expertise.

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D. Stussy wrote:
- quote -

I have no quarrel with your malpractice assertion. I was
responding to Gil Faver's post which I felt was an
unwarranted criticism of the taxpayer ("he himself") for
agreeing to a settlement without considering the tax
consequences. I contend that a taxpayer with no education
or training in law or accounting should be able to have
confidence in and rely on the advice and counsel of his
attorney. I would hope that any licensed professional would
agree, else why retain same?

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"Paultry" <afn02552at[at]afn.org> wrote in message
news:LbidnSXOAf6RcADVnZ2dnUVZ_vjinZ2d[at]centurytel.net...
- quote -


And why shouldn't the critizism be? Where you see confidence, I see
malpractice.

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Gil Faver wrote:

- quote -

Harsh criticism of a blue collar worker who may deal with a
tax issue of this nature maybe once in his lifetime? I'm
sure he was confident that his lawyer, who took 40% of the
settlement, was looking out for the client's best interests.

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"D. Stussy" <spam[at]bde-arc.ampr.org> wrote in message
news:g7ihgs$kic$1[at]snarked.org...
- quote -

and he should kick himself real hard for agreeing to a settlement without he
himself considering this angle.

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >