1099 for settlement what about lawyer fees?
You report it as an expense against the 1099 income when you do your taxes. You will only be taxed on the amount after the lawyers fees (but if it cost you more in lawyers fees than you recover in damages, the loss is not deductible). Be sure to keep documentation of the lawyers bill and the contract. Compensatory damages are generally not taxable at all. You can see here for more information on that.
You should consider using a lawyer as your agent. We once talked to one who was willing to act as our agent for a fixed fee. Not all attorneys can do it where we live, but there are plenty that can. We ended up going another route, but since then we have found a seller's agent that charges us a fixed fee of one thousand dollars (a great deal for us). We are using her again right now.  It's all about the contract. Whatever you can legally negotiate is possible - which is yet another reason to consider finding a real estate attorney. "I actually interviewed to work at the SEC as an ""industry transplant.""  I was surprised to learn the limits of the SEC's power - namely, they cannot compel anybody to show them any documents - even ones financial firms are required to hold.  When firms do ""cooperate,"" they tend to make it as difficult as possible for investigators.  All the SEC can do in the end is sue the firm, and that's a long drawn out process (I understand now why there are so many settlements).  What I learned, however, is that the SEC needs more people like myself who have worked in the business.  Most people who interviewed me were attorneys and (sometimes) accountants.  Their experience in the financial industry was limited to working at legal firms who did financial advisory work.  Many simply don't even know what to look for.  I'm still waiting to hear back, but there are a lot of lawyers who are sick of working industry jobs and would love the pay and work environment of the SEC - so it's tough to get a position there." "These agencies consolidate your debt and make it an easy monthly instalment for you. They also try to negotiate with credit cards. They do so for a fee. Other option is to not pay the debt. During this time , expect credit cards to keep sending you bills and reminders and ways to contact you. Once it is not paid for a significant amount of time ( 18 months ) , the lender will ""sell"" your debt to a collection agency. You will start getting bills from collection agencies. Collection agencies can settle for up to 40 % of the actual debt. So if you had 5 credit cards , you would have 5 different collection agencies trying to get in touch with you. You can call them and tell them that you cannot pay the full amount. They will offer you settlements which you can accept or decline. The longer the unpaid debt , the more the discount they will offer. One very important thing to remember is that the unpaid amount will be sent to you on a 1099-c form . This means you have to recognize this as income. It is applicable to the year when the debt is settled. In a nut shell , you owe 120,000. You don't pay. Credit cards keeps calling you. You don't pay. After 12-18 months , they handover your debt to collection agencies. Collection agencies will try to get in touch with you. Send you lawsuit letters. You call and settle for say 50,000. You pay off 50,000 in 2016. Your debt is settled. But wait you will get 1099-C forms from different agencies totaling 70,000 ( unpaid debt ). You will have to declare that as income and you will owe tax on that. Assuming say 30 % tax you will have to pay up 21,000 as tax to IRS assuming no other income for simplicity. SO what you did was pay up 50 + 21 = 71,000 and settled the debt of 120,000. Your credit score will be much better than if you never paid at all." The likely outcome of adding extra money to your escrow account is that the bank will send you a check for excess funds at the end of the year (or whenever your property tax and insurance payments are processed). Could you just redeposit that money immediately? Possibly. I bet most banks wouldn't care and would just follow the routine of clearing the excess from the account next time they process payments. I've never received a 1099 for interest in an escrow account. It is possible that when you start earning enough interest that a 1099 is required by law ($10/year) that the bank gets a little more aggressive about pushing your money back to you. I'm not sure why that hassle is any better than just opening up your average internet savings account (many don't have any of the fees you mentioned) and parking it there with a similar interest rate. You can deposit and withdraw using ACH transactions that post by the next business day. That said, unless they do start rejecting your money, there aren't a lot of downsides in your plan. Since you say 1099, I'll assume it's in the US. :) Think of your consulting operation as a small business. Businesses are only taxed on their profits, not their revenues. So you should only be paying tax on the $700 in the example you gave. Note, though, that you need to be sure the IRS thinks you're a small business. Having a separate bank account for the business, filing for a business license with your local city/state, etc are all things that help make the case that you're running a business. Of course, the costs of doing all those things are business expenses, and thus things you can deduct from that $1000 in revenue at tax time. Interesting.  How would they account for it? Monthly? And if so do they modify the cost basis for each lot for the month and then restate?   It's hard to imagine they do that.   I have a million questions regarding this topic do you know where in the regs it is covered? "The issues are larger than taxes.  If one of you receives the check, then breaks off 25% of it for themselves and sends three checks out to each of you that will be indicated on that person's taxes.  You three will then all recognize your portion of the income on your taxes and it's all settled.  It's no big deal, it's a bit rag-tag but it'll get the job done.  I've done little ad-hoc partnership work with people this way and it's not a problem. This is why you should really be more formal.  What if this entity contracting you guys sues you?  Who has the liability, if only one of you was paid?  What if the money is sent to one of you and that person dies before paying you?  What if you all get another client?  What if this contracting entity has another project?   The partnership needs to have the liability.  The partnership needs to receive the money.  The partnership needs to be named on whatever contract you all sign.  The partnership can be a straight partnership, or maybe the four of you take a 25% stake in an LLC or Inc arrangement.  Minimally, you should sit down with your partners so everyone knows everyone else's responsibilities, and you should write it all down.  It probably sounds like overkill, and I'm sure your partners are you buddies and ""we're tight and nothing bad could come between us.""  I've done some partnership work with more than one friend, we've always been fine.  Some ventures are successful, some aren't; I'm still very good friends with all of them.  Writing things down manages expectations and when money starts moving around, everyone is happier when everyone has a solid expectation of who gets what." My wife was once on a game show.   The income was 1099 and wholly unrelated to gambling.  I did offset the hotel cost on a schedule C against it (and filed a California return to get back the withholding) but a television appearance for a prize is not gambling.  It is pay for a performance and she didn't risk any of her own money.   Your friend's 8k loss can only offset casino or lottery winnings, sorry.