Tip of the Week #7

Be careful demanding punitives as a matter of course in your personal injury cases; punitive damages are taxable whereas compensatories usually are not. If you settle a case in which you demanded punitives, the IRS will want to allocate some of that recovery to the punitives claim triggering tax liability for your client. If you really have a claim for punitives, you can assert the claim later in time for trial.

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