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Settlement

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T

tgitom

Guest
What is the name of your state? NY

Can a cash settlement that was won be signed over to someone else in full or signed half over to another person? If so what happens with tax implications?
 


abezon

Senior Member
It depends what the settlement is for. If the settlement is taxable, the full amount is reported on the recipient's (your) 1040 and any 'signing over' is either a gift or a further settlement to the donee (the other guy). If the money is not taxable, it is not reported on the recipient's return and is a gift or settlement to the donee. In either case, a gift tax return is required if the donee reeives more than $11,000.

The only way a taxable settlement can be split on 2 returns initially is if the 2 people had a partnership & one of them was suing on behalf of the partnership. Then the settlement would be reported on the partnership's tax return & apportioned to the 2 people via the partnership K-1s.
 
A

Andy Brown

Guest
Who determines what part of a settlement is taxable? For example,
if someone receives $50,000 and no forms are generated (W-2, 1099-MISC, 1099-R, etc.) will the IRS automatically assume the entire amount is taxable?
 

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