Don't give tax advice if you don't have any clue what you're talking about. https://www.irs.gov/pub/irs-utl/lawsuitesawardssettlements.pdf https://www.irs.gov/

Don't give tax advice if you don't have any clue what you're talking about. https://www.irs.gov/pub/irs-utl/lawsuitesawardssettlements.pdf https://www.irs.gov/pub/irs-utl/lawsuitesawardssettlements.p... Wrongful Death Claims for wrongful death usually encompass compensatory damages for physical and mental injury, as well as punitive damages for reckless, malicious, or reprehensible conduct. As a result, both claims may generate settlement amounts. Any amounts determined to be compensatory for the personal physical injuries are excludable from gross income under IRC § 104(a)(2). Any amounts determined to be punitive are not excludable under IRC § 104(a)(2). This is true regardless of whether the punitive amounts are received prior or subsequent to the August 20, 1996, amendment. See O’Gilvie v. United States, 519 U.S. 79 (1996). Caution, however, should be used in applying the general rule that punitive damages received in wrongful death case are taxable. Historically, the courts have looked to the state statute under which the wrongful death claim was litigated to determine whether there could be compensatory and/or punitive damages awarded. This search may reveal a state statute which provides only for punitive damages in wrongful death claims. In these cases, IRC § 104(c) allows the exclusion of punitive damages for amounts received after 1996.