I need some help figuring this out...

Question

Troy Acheman is a sports caster for Everyone’s Sports Presentations Nightly. While Troy was covering a professional football game from the sideline, the Birds famous wide receiver, Harry Race, ran out of bounds, tripped over a bench, knocked Troy down, and stepped on him, severely injuring Troy. Troy retained well-known plaintiff’s lawyer Marc There-it-goes to sue Deep Pockets, Inc., the team owner, for negligently placing the bench in that location. After trial, a judgment for $500,000 was entered against Deep Pockets, Inc. What are the tax consequences to Troy upon the payment of the judgment?

Answer 1

Yes, it is taxable. But you can deduct legal fees that you incurred to reach the settlement. Enter $500,000 as "other income" on the 1040 form, then subtract the cost of legal fees. Then the net amount would be taxable.