1099 But Not Income

I received a 1099 for $6600 from American Express. The backstory is that they sent me a refund check for $1600 which was stolen, forged, and cashed. They badly mishandled the incident (by, for example, telling me they had issued a stop payment when they hadn't) and then compounded it with 16 months of further lies and mishandling.

Eventually I filed an arbitration suit against them for $100,000, which we settled for $5000 plus the $1600. None of the money can reasonably be described as lost income.

They send me a 1099 with the notation "legal settlement." I don't consider this income. Surely the $1600 is simply a reimbursement, and the other $5000 is more in the nature of punitive/bad faith damages.

Will I have any difficulty if I simply ignore this 1099 on my taxes?

Reply to
Roger Fitzsimmons
Loading thread data ...

Yes, you will. Punitive damages are taxable. Look at Sec. 104 of the statute. (Why do you think they aren't.)

Reply to
adjunct

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.