What is the name of your state? Georgia
This re: an audit from the IRS for 2006. A hedgefund I invested in lost over 100K in 6 months...I sued them without going to court because of the large losses and the way I was enticed to invest with them. I considered this misrepresentation and fraud to a degree. Without admitting to any guilt (per settlement) ..they settled with me and awarded me 60K. I was not "made whole" so I thought this was not ordinary income. I did not include this as income on my 2006 1040. Apparently this hedgefund sent the IRS a 1099 misc. showing this income. I just received notice that they want 20K in taxes plus 4K in penalties and 2K in interest. Should I fight this? I read that settlements are only tax free if it involves injury or illness but, isn't this a loss due to fraud? Would or could this be treated differently? I have 3 more weeks to respond or pay the bill. What do you think? Any help/opinions appreciated here.
Thanks..Barron69
This re: an audit from the IRS for 2006. A hedgefund I invested in lost over 100K in 6 months...I sued them without going to court because of the large losses and the way I was enticed to invest with them. I considered this misrepresentation and fraud to a degree. Without admitting to any guilt (per settlement) ..they settled with me and awarded me 60K. I was not "made whole" so I thought this was not ordinary income. I did not include this as income on my 2006 1040. Apparently this hedgefund sent the IRS a 1099 misc. showing this income. I just received notice that they want 20K in taxes plus 4K in penalties and 2K in interest. Should I fight this? I read that settlements are only tax free if it involves injury or illness but, isn't this a loss due to fraud? Would or could this be treated differently? I have 3 more weeks to respond or pay the bill. What do you think? Any help/opinions appreciated here.
Thanks..Barron69