Rudy Giuliani's $148 Million Verdict: Tax Write-Offs and Plaintiff's Burden

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 complex tax rules surrounding damages and settlements can lead to mismatches and disputes, with plaintiffs often having to pay taxes on monies their attorneys collect.