Janet won a legal settlement against her employer for 50000, Ask an Expert

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Janet won a legal settlement against her employer for $50,000, the result of gender discrimination claims against the employer.

Her lawyer received the $50,000 on December 21, 2015. After deducting his 40% the lawyer mailed a check for $30,000 to Janet on January 6, 2016. Provide a tax file memorandum outlining your research regarding the treatment of the settlement and the related legal fees.

Your research should answer the following questions.

1) How much, if any, of the $50,000 settlement is included in Holly's gross income?

2) Assuming that Holly has gross income from the settlement, in what year is the gross income reportable?

) Is any of the $20,000 of legal fees deductible by Holly and, if so, is the deduction for AGI or an itemized deduction?)

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92796866

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