Settling a lawsuit? 3 tips to reduce the IRS’ share

If you’re embroiled in a contentious legal dispute, taxes may be the last thing on your mind. But errors in the way you draft a settlement agreement could mean thousands of dollars going into Uncle Sam’s pocket—instead of yours. Strategy: Try to minimize the income tax consequences of a settlement. And do it before you sign the agreement. Once that occurs, you’re stuck with the deal you made.