This bill allows an above-the-line tax deduction for court costs and attorney’s fees awarded to an individual as part of a settlement or judgment for a claim related to certain consumer protection violations, subject to limitations. (An above-the-line deduction is subtracted from gross income to calculate adjusted gross income.)

Under current law, court costs and attorney’s fees awarded to an individual as part of a settlement or judgment are included in the individual’s gross income, even if such attorney’s fees are contingent upon the outcome of the claim or paid directly to the individual’s attorney. (Some exceptions apply.) However, under current law, an above-the-line tax deduction is allowed for court costs and attorney’s fees awarded in connection with certain employment and civil rights discrimination claims.

This bill expands the above-the-line tax deduction for court costs and attorney’s fees paid in connection with certain discrimination claims to include court costs and attorney’s fees awarded as part of a settlement or judgment in a claim for

• unfair, deceptive, or abusive trade or credit practices;
• harm to an individual by a seller or provider of property, services, securities or other investments, money, or credit; or
• certain other consumer protection violations.

The deduction is allowed to the extent that such amounts are includible in the individual's gross income.