His practice areas include Medicaid and VA benefits planning, special needs trusts, Medicare benefits, and Qualified Settlement Funds
. Pi-Yi is an active member of the National Academy of Elder Law Attorneys and the Texas Chapter of National Academy of Elder Law Attorneys.
Qualified Settlement Funds
and Section 468B, by Robert W.
Wood has written a new book, "Qualified Settlement Funds
and Section 468B" ...
* Only the net amount of damages received from qualified settlement funds is included in gross income.
This category encompasses claims that fall outside sections 62(a)(20) and 104(a)(2) but under either fee-shifting statutes, where the court awards legal fees directly to counsel, or "qualified settlement funds" covered by Treasury regulations section 1.468B-1.
Qualified settlement funds include the designated settlement fund plus liabilities under tort, environmental, breach-of-contract, violation-of-law, and other claims as designated by the IRS.
A qualified settlement fund (QSF) allows claimants to set up structured settlements without defendants' participation, so plaintiffs can receive the tax advantages of these settlements on terms, that best meet their needs.
IRS guidance: In a series of letter rulings, (16) the Service ruled that contingent attorneys' fees paid from qualified settlement funds
, as defined by Sec.
Specifically, this includes exceptions to reporting of payments to payee attorneys who were acting as (1) settlement attorneys or title insurers in real estate trasactions, (2) executors or estate administrators (e.g., those receiving payments of life insurance proceeds), (3) trust trustees (e.g., pension plans and bankrupt estates) and (4) administrators of qualified settlement funds
Qualified settlement funds
, which are generally established to administer a litigation judgment or settlement to a class of plaintiffs, are subject to a myriad of income tax paying, reporting and withholding requirements.
468B dealing with qualified settlement funds
did not provide guidance for accounts and funds governed by Sec.
468B and related regulations apply to determine when economic performance is deemed to occur when taxpayer makes a transfer of money or other property to a designated settlement fund (DSF) or a qualified settlement fund