Can a doctor deduct Settlement Agreement as business expense?
Dr. Q is medical doctor who performs surgeries in his office. In June, 2012, a patient named J came to him with an ingrown toenail. Q performed a surgery to remove the toenail. However, as a result of gross negligence, he removed the entire toe. Now J sued Q for malpractice and then settled out of court for $90,000. While Q has malpractice insurance, he never submitted a claim because he was afraid that his rates would go up if he did so. So, Q paid J $90,000 out of his own funds. Now, Dr. Q would like to know about the deductibility of $90,000.
Comments
Face to face professional advice and guidance would be required at this time in the DR life to try and get this done correctly and prevent some bigger problems in the future about this matter.
Hope that you find the above enclosed information useful. 11/23/2013
To the extent that the settlement is compensation for the patient's losses it's a deductible business expense. If any of it represents punitive damages, that is not deductible.
Tell Dr. Q to ask his accountant.
no