Hulk Hogan Settles $140 Million Gawker Verdict for $31 Million – IRS to Collect

Hulk Hogan recently settled his suit with Gawker for $31 million after four years of litigation.  Hogan brought the invasion of privacy suit over Gawker’s posting of a Hogan sex tape.  While a $31 million settlement seems like nice deal for Hogan, we cannot forget the legal fees and taxes owed to the IRS.

Attorney fees are often a surprising tax trap for many plaintiffs.  When a plaintiff uses a contingency Attorney, the settlement to is treated as 100% income to the plaintiff for tax purposes.  Some settlements are nontaxable (most personal injury cases) – involving physical injury.  However, in a case such as Hogan where there was no recovery for physical injury damages, the settlement is treated as taxable income to the plaintiff.