Legaltaxation News

Rudy Giuliani's $148M Verdict: Tax Implications and Next Steps

Rudy Giuliani has been ordered to pay nearly $150 million in damages for defamation to former Georgia election workers, but he may be able to write off the verdict as a business expense if he was acting as a lawyer for former President Trump at the time. In contrast, the plaintiffs will have to pay taxes on the entire amount, including funds going to their lawyers. Punitive damages are taxable ordinary income, even for emotional distress cases, while recoveries for physical injuries are tax-free. The tax rules surrounding damages can be complex, with many judgment calls, and plaintiffs often have to get creative to deduct their legal fees.