Points will be awarded for identifying the issues, the law that applies, and a significant percentage of the points awarded will be based on a thoughtful communication of your conclusions and ultimate advice. Please cite any legal or administrative support you utilize to reach conclusions.

A personal injury lawyer you know refers you to a client she is representing in a high-profile case. You meet with your new client and discover she is a former Olympic figure skater that has been very prominent in the national news. Your new client (Plaintiff). tells you a horrific story about being attacked by a fanatical fan with a tire iron, resulting in the loss of her leg. It is thought that the fan wanted Plaintiff’s primary rival to win the gold medal. Plaintiff hired your lawyer friend to sue the fan and successfully recovered a significant amount of money in a structured settlement. The final settlement agreement is not yet complete, so your client believes there is still time to make changes, including going to trial in front of a jury. She proceeds to give you the following possibilities, and asks that you comment on the tax implications of each:

1. The settlement award is $200,000 and the agreement simply says payment of damages in release of all future claims.
2. Settlement is $250,000 with $100,000 of that amount allocated to compensation for scheduled performances Plaintiff failed to make as a result of the injured leg.
3. She takes the case to a jury which awards the $200,000 in A and an additional $200,000 in punitive damages.
4. She goes to a jury trial and the jury awards the $200,000 in A and an additional $200,000 of damages when they hear that Plaintiff has become suicidal as a result of the loss of the use of her leg.
5. Turns out that a contributing factor in her suicidal tendencies is a second tragic event. In addition to the loss of the use of her leg, she was harassed by a former coach. Her attorney filed suit against that former coach and recovered damages of $200,000 in that suit. Your client would like to combine that damage award with the award in A above because she believes they are related.

Answer rating: 100% (QA)

Answer 1 The settlement award is 200000 and the agreement simply says payment of damages in release of all future claims Under the Internal Revenue Code any damages received as a result of a personal ... View the full answer