I’ve received a settlement from the Cecil-BP class action. Can anyone give me any guidance as to how to treat that for taxes? Do i just report it as royalty income (albeit delayed!) or do I have to report it differently for tax purposes? Sure would appreciate any help. It’s only $350 so it’s not worth hiring a lawyer to ask the question, so I’m hoping someone else has insight on this. Maybe the 1099 would have given me some guidance but I didn’t get one, and the settlement administrator’s phone is now dead, as is the settlement website.
Vivian, see my reply to your other post. I do my own taxes (TurboTax). Since it is reported as “Other Income” on our 1099, I will not get to apply the state and federal depletion allowance deduction, so am disappointed.
Wesley- IMHO you should use depletion allowances. These settlements are for non-authorized, if you will, deductions from your revenue stream. If they hadn’t been deducted in the first place, your royalty check would have included these amounts under normal revenue. Had that been the case, you would have taken the depletion allowances. I would take them and let someone else tell me why I can’t. Again, IMHO.
Thanks Todd. I will consider that alternative. Martha Barnes, if I may ask, did you get a portion of this settlement, and if so what does your tax adviser say? Any opinions from others?
Thanks so much. Both your posts were very helpful! I do my own too.
Thanks so much. This is very helpful.