Increasingly, "the tax problems associated with litigation recoveries are nuanced and not suited to
cookie-cutter solutions" says tax attorney Robert Wood in an excellent picece entitled Top 10 Mistakes Made by Contingency Fee Lawyers , published May 16, 2011 in Tax Notes
The important message is that…
"Lawyers, structured settlement brokers, accountants, financial advisers, and others are likely to encounter these issues. They often arise in ways that combine multiple rules applying across a mix of confusing facts and documents. Learning when, where, and how to address these problems can be challenging. Even identifying the issues requires attention to detail. Whatever your role in these situations, address the tax issues early, often, and thoughtfully".
I recently highlighted one issue that appears to fall into what Wood is talking about and that is whether or not a decedent's heirs may structure pre-death damages of the decedent where, for example, there has been extended period of pre-death pain and suffering pled and documented. that must flow through an estate and then be distributed as an inheritance, subject to the decedent's will or surrogate decision, under IRC 102. IRC 130(c) is silent on it.
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