Plaintiff attorneys can structure their contingent fee via §130 QAssignment — deferring tax to payment years.
Contingent-fee attorneys can elect to have their fees structured (annuity or T-Bill-based) rather than paid lump sum. Because the fee is assigned pre-receipt to a qualified assignee, the attorney does NOT have constructive receipt — tax owed in the year of PAYMENT, not settlement. On a $2M fee structured over 10 years, defer $500K+ of tax while earning guaranteed returns. Confirmed by Childs v. Commissioner. Modern products: fixed annuity, market-linked, T-Bill-plus.
Click Generate advisory deep dive for mechanics, IRC citations, a step-by-step execution plan, a worked numeric example on your profile, costs, risks, and this-week actions.
Damages 'on account of' personal physical injury or physical sickness are 100% excluded from gross income.
Structured PI settlement pays tax-free installments for life via a qualified assignment — better than lump-sum + investing.
Depositing settlement into a §468B QSF lets plaintiffs delay constructive receipt while negotiating allocations and structures.
For taxable settlements, use a Plaintiff Recovery Trust or origin-of-claim allocation to avoid attorney fees being taxed to plaintiff.
If emotional distress ORIGINATES from a physical injury, entire settlement is tax-free — even the emotional portion.
IRC §62(a)(21) allows above-line deduction for attorney fees on federal whistleblower recoveries — full net-of-fees tax.
MSA earmarks portion of PI settlement for future Medicare-covered care so plaintiff doesn't lose future Medicare eligibility.
Forced to repay income taxed in a prior year? §1341 lets you deduct now OR recompute prior year — take the bigger benefit.