Personal Injury Lawsuit - Taxable?

[Ephesians3-14]

I have an elderly client who died in 2024. A lawsuit was filed by her estate claiming that the assisted living staff abused her. The estate won a $300K judgement.

I'm pretty sure the personal injury proceeds aren't taxable to an individual recipient. Is that also true for the estate? Not taxable, so therefore not even reported on Form 1041?

Thanks for any feedback. 

[IRonMaN]

I don't believe the fact that the client passed away changes the nature of the income.  Sounds like there is nothing to report on the 1041.

[BobKamman · Accepted solution]

Ultimately, individuals received the benefits of the proceeds.  Not taxable.  

[Accountant-Man]

When the money is given to the estate, is it being reported to the IRS in a 1099 or other?

If you, then how to prove it is not taxable if you are reporting it?

[BobKamman]

Taxpayers don't have to prove anything when filing returns, but sometimes it's a good idea to anticipate questions from IRS.  I doubt that a 1099 was issued here, and the first step would be to ask the payer why they did that.  You could attach a statement to the return explaining why it was not taxable -- not that anyone would read it, but it would remind anyone a year later of what happened, if IRS asks.  

[Ephesians3-14]

I've asked the client whether a 1099 will be issued. Haven't heard back yet. To answer your question, I would (in that case) report it as income on page 1 and then take a deduction as well to zero it out.