Are Legal Settlements & Restitution Taxable Income?

[Adverse]

Hi, I haven't been here for awhile.

My Dad's broker stole money from him. My dad has passed away.

His Estate is receiving restitution from the broker. The Estate also just received a settlement from the brokerage. The settlement was reached through Mediation, to discharge an NASD claim file against the brokerage.

Trust and Estate tax rates being what they are---35%!!!!---I am curious as to whether there will be anything left, after attorney fees and taxes.

Are the restituiton payments and the settlement taxable as income to the estate?

Thanks.

 

[Adverse]

Wow!

Is there not anyone who knows this?

I figured someone would jump right on it.

 

[NYClex]

have a look here: http://www.wwwebtax.com/income/legal_settlements_court_awards.htm

 

[Adverse]

Thanks.

That's what I have been reading also, but was hoping it wasn't true.

Would settlement amounts paid to replace lost or stolen money also be taxable?

Could you "carry forward" the amount of loss during my father's last couple of years to offset the restitution and settlement paid to his estate?

I've sent the link to my brother and sisters.

 

[Adverse]

I see this another of those topics that has attracted a lot of interest

I like closure.

The accountant for the estate has ruled that the money that has been recoved from the broker and the brokerage represents return of principle, not taxable income.

That's goo news.