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Tax Relief for Wildfire Victims: Settlements and Legal Fees

This bill introduces significant changes for individuals affected by certain forest and range fires. It allows taxpayers to deduct attorney fees and court costs related to awards for wildfire damages. Additionally, settlement funds received for such damages will be excluded from gross income, providing financial relief to victims.
Key points
You can deduct attorney fees and court costs if you received an award for damages from certain federally declared wildfire disasters occurring in 2015 or later.
Money received from qualified settlement funds for these wildfire damages will not be counted as taxable income.
These changes apply to attorney fees and settlement amounts paid after May 31, 2020.
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Additional Information
A bill to amend the Internal Revenue Code of 1986 to establish a deduction for attorney fees awarded with respect to certain wildfire damages and to exclude from gross income settlement funds received with respect to such damages.
Print number: S 4666
Sponsor: Sen. Feinstein, Dianne [D-CA]
Process start date: 2022-07-28