1099- MISC BOX 3 Casualty loss?

[MYDALBASTI]

Has anyone come across a 1099-MISC with box 3 other income filled in for a lawsuit which incurred a casualty loss?

[kcjenkins]

I'm confused by your question, How does a lawsuit incur a casualty loss?

Suggest you look at Pub 525 page 29, Court awards and damages.

[MYDALBASTI]

Sorry KC I guess I didn't explain myself correctly. The lawsuit was for property damages and they won. The lawyer then sent them a 1099-MIS with box 3 other income. I was pretty sure that this was not a taxable event but thought I should check just to make sure. I'm going to have to call this lawyer.

[kcjenkins]

It well may be taxable, but you do need to read the settlement paperwork.

Loss-in-value of property

• Property settlements for loss in value of property that are less than the adjusted basis of your property are not taxable and generally do not need to be reported on your tax return. However, you must reduce your basis in the property by the amount of the settlement.

• If the property settlement exceeds your adjusted basis in the property, the excess is income. For more information, see the Instructions for Schedule D, (Form 1040) Capital Gains and Losses and the Instructions for Form 4797, Sales of Business Property.

Interest: Interest on any settlement is generally taxable as “Interest Income” and should be reported on line 8a of Form 1040.

Punitive Damages: Punitive damages are taxable and should be reported as “Other Income” on line 21 of Form 1040, even if the punitive damages were received in a settlement for personal physical injuries or physical sickness.