1099 reporting of large legal settlement

May 27, 2021


Q. I have a vendor, a law office firm, that we paid a $100K retention payment to last week. The defense cost of $395K is going to be paid from our Self Insured Retention (SIR) for our insurance liability coverage. Should I go ahead and report the $100K in full on Form 1099-NEC? This law office claimed it as retention payment. Or should I report it as Gross Proceeds Paid to Attorneys in Box 14 of a 1099-MISC? What happens to the $395K settlements that our company is liable to pay? Should the…

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