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Tax question for lawyers

1378 Views 31 Replies 13 Participants Last post by  DNeurococo
I was told recently that someone won a $500,000 law suit. It was appealed and the final settlement was reduced to about $325,000.
The person paid the lawyer about $125,000. They were told by two tax attorneys that they had to pay taxes on the original $500,000 award AND had to pay taxes themselves on the amount the lawyer got too.

I assume this must be right if two tax attorneys agree. :eek:
I assume that the lawyer will get taxed on the amount they received also.
First, isn't that double taxing the legal fees?
Second, why would they have to pay taxes on an amount they nere received?

Please inform the weak of legal and tax minded!

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Does that qualify as a legal fee for the purposes of taxation? What it BassetMan doesn't agree to your price? Some of us would still like to know why someone who was shafted badly enough to win a half-million dollar settlement is then double-dipped by the government.
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