…Because paying more taxes than you owe on a settlement or verdict makes no sense.
The Scenario: You and your business have been harmed. You filed a lawsuit and have now received a settlement or verdict – a victory. If you haven’t already, you are realizing that you must deal with the tax consequences associated with this recovery. Do you know what to do to minimize your taxes? DiMaria Law does and can help.
As an example, would you like to know if you can potentially claim this settlement/verdict as a Capital Gain at a 20% tax bracket instead of Ordinary Income at a 50% tax bracket?
If you are able to claim this settlement/verdict as a Capital Gain instead of Ordinary Income, you could cut your tax burden in half.
DiMaria Law can help you with this and many other potential alternatives.
When do I want to start utilizing DiMaria Law for tax advice?
We can provide a valid tax opinion after the settlement is finalized, if we are not contacted earlier. However, you must get a written tax opinion before you file your tax returns for the year in which you received their settlement or award. This enables the you to use it in any future IRS audit and to avoid the substantial underpayment penalty.
Ideally, you should have a relationship with us whereby you can utilize us in the litigation from the inception of the litigation through to the ultimate written tax opinion that is provided. As stated above, a good tax attorney can assist with the correct language and characterization of damages that are requested and ultimately agreed upon. So many cases today are resolved via lump sum settlements making it even more important to properly characterize the damages that are paid.
DiMaria Law has years of litigation experience and act as a compliment to your underlying trial attorney.