Chegg Fumbles Again: “Problem Solve” Feature Misfires on Structured Settlements

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Who is Chegg?

Chegg is an American education‑technology company based in Santa Clara, California, built on the promise of “improving learning outcomes by putting students first.” If that mission is more than marketing copy, then putting students first should start with something basic: providing accurate information.

I’ve taken Chegg to task for this kind of profligacy before—twice, in fact, in 2021. This latest misfire shows the lesson still hasn’t landed. Chegg’s “Problem Solve” feature once again stumbles over structured settlement fundamentals, offering students an answer that is not just incomplete, but flat‑out wrong.

The Legal Definitions of Personal Injury, Compromise, and Tax Treatment aren’t Abstract Concepts

And here’s the real issue: compromise, tax treatment, and the legal definition of personal injury aren’t abstract concepts. They have real‑world consequences. Students deserve accurate, practical examples—not misinformation dressed up as expertise.

Chegg claims to support students on their journey from high school to college and into their career with tools designed to help them learn their course materials, succeed in their classes, save money on required materials, and learn the most in-demand skills”. Chegg company stock flourished during the Covid 19 pandemic, but it’s less than 1% of its all time high (as of February 9, 2026 close)

Using the latest verified numbers:

All‑time high closing price: $113.51 on Feb 12, 2021
Most recent Friday close: $0.75 on Feb 9, 2026

Percentage of All‑Time High

$\frac{0.75}{113.51} \times 100 \approx 0.66 %$

Chegg is trading at roughly 0.66% of its all‑time high.

Why Accuracy Matters in Structured Settlement Education

As part of my Structured Settlement Watchdog role, my mission includes clearing the path to accurate structured settlement information. Chegg doesn’t deliver when it comes to structured settlements, on this showing, and not for the first time either. Check out this Chegg botched “Problem Solve”:

“An individual or corporation wins a civil action, and a settlement is generated and negotiated as a result. A resolution often involves a one-time lump amount of cash to address immediate expenditures, followed by tax-free, assured recurring repayments tailored to the settlement winner’s requirements. Large future compensations have lately been paid through a regular intervals deal, often referred to as a structured settlement”. Chegg Problem 35TF Chapter 7 Tort Law (6th) Edition 1305537576 9781305537576

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SIDE BAR

“Regular Intervals Deal”? Did you know that structured settlement payments could be paid “spasmodically”? How about learning how to calculate the present value of that?

Spasmodically…At uneven or varying rates or intervals Source: WordHippo

Types of Structured Settlement Payments Structured Settlement Options (4structures.com)

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Why A Business Entity Cannot Suffer a Personal Injury

“Personal injury” is a term of art in tort law. It refers to physical injury, sickness, disease, or death suffered by a natural person. A business entity — corporation, LLC, partnership, nonprofit, etc. — is a legal person, not a biological one. It has no body, no health, no physical integrity to be harmed.

So a business can suffer:

Economic loss
Reputational harm
Contractual damages
Business interruption
Property damage

…but not a “personal injury.”

Why This Matters in Structured Settlement Context

This distinction is critical because:

IRC §104(a)(2) excludes damages from gross income only when they arise from personal physical injuries or physical sickness.
A business cannot meet that threshold.
Therefore, a business cannot receive a tax‑free structured settlement under §104(a)(2).
Any structured payment arrangement to a business is taxable, and not a “structured settlement” in the statutory sense.

Deeper Dive into the Details

IRC Section 104(a)(2) provides, in general, that gross income does not include the amount of any damages received (whether by suit or agreement) on account of personal physical injuries or physical sickness.
Section 1.104-1(c)(1) of the Income Tax Regulations provides that the term “damages received (whether by suit or agreement)” means an amount received through prosecution of a legal suit or action based upon tort or tort type rights or through a settlement agreement entered into in lieu of such prosecution.
Section 1.104-1(c)(1) further provides “damages for emotional distress attributable to a physical injury or physical sickness are excluded from income under section 104(a)(2).”
See also Section 1605 of the Small Business Protection Act of 1996, H.R. Conf. Rep. No. 104-737, at 301 (1996), reprinted in 1996 U.S.C.C.A.N. 1474, 1793 (legislative history notes that “… the exclusion from gross income applies to any damages received based on a claim of emotional distress that is attributable to the physical injury or physical sickness.”).
Section 1605 of the Small Business Protection Act of 1996 limits the exclusion from gross income provided by section 104(a)(2) to amounts received on account of personal physical injuries or physical sickness. The legislative history to the 1996 amendment provides: … If an action has its origin in a physical injury or physical sickness, then all damages (other than punitive damages) that flow therefrom are treated as damages received on account of personal physical injuries or physical ickness whether or not the recipient of the damages is the injured party. For example, damages (other than punitive damages) received by an individual on account of a claim of loss of consortium due to the physical injury or physical sickness of such individual’s spouse are excludable from gross income “Because a business entity cannot suffer a personal injury within the meaning of IRC § 104(a)(2),
P & X Markets, Inc. v. Commissioner, 106 T.C. 441 (1996), aff’d in unpublished order, P & X Markets, Inc. v. Commissioner, 139 F. 3d 907 (9th Cir. 1988), this guide applies to recoveries by individuals only”. Source: Lawsuits, Awards, and Settlements Audit Techniques Guide (Internal Revenue Service Rev.5/11/)

Settlement “Winners”?

A settlement is a compromise. According to the Legal Information Institute at Cornell law School, a settlement is “an agreement that ends a dispute and results in the voluntary dismissal of any related litigation”. settlement | Wex | US Law | LII / Legal Information Institute (cornell.edu)

Compromise almost always produces a mix of gains and concessions, which means there can indeed be relative winners and losers. Each party gives something up, and the balance of those concessions determines who comes out ahead.

Why not educate students—and the intellectually curious fans of lifelong learning—with accurate, real‑world examples and information that actually has practical value??

I’ve previously criticized Chegg’s profligacy in front of goal in two posts from 2021, and unfortunately, not much has changed.

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