Client had a biz in a mall, sold animals (puppies, cats and fish).The resturant next door caught fire, and the smoke damage was horrific. The mall closed them down and they took a heavy loss.
This was in December 2005. Last August after suing the insurance company, they recieved a settlement.. They recieved $200,000, for punitive damages, attorney fees and compensatory damages. The check was written to the lawyer, who put it in escrow, after reciving their cut. The clients recieved a check for $20,000 after lawyers got theirs. They have recieved nothing from the lawyer (1099) or anything about it. I know that punitive damages are taxable income, but I guess this time of the year, my brain is on overload and I'm not sure how to handle it. The lawyer said they would take care of it for tax purposes. (told off my assistant manager today, and it's been all down hill from there). Could really use a little help here.
Thanks a bunch,
Sherri