Legal settlement for death of adult child

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Message Board Legal settlement for death of adult child

This topic contains 1 reply, has 2 voices, and was last updated by Sandy Weiner 1 week, 4 days ago.

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  • #124071

    A CA resident had an adult daughter residing in Canada who was killed in a car vs. bike accident. The family is now receiving a settlement for various claims, including:
    – Out of pocket expenses such as funeral, traveling, grief therapy, etc.
    – Loss of income for mother and sister of deceased
    – Limited non-pecuniary such as mental distress, psychological trauma, loss of guidance, care and companionship

    Since this was essentially a wrongful death claim, and no medical expenses, funeral expenses, etc. were deducted, would all of the amount be excludable from income as it relates to personal physical injury?

  • #124487
    Sandy Weiner

    Yes as long as there were no punitive damages involved. See IRS Letter Ruling 201019005. California conforms to federal treatment (R&TC Sec. 17131)