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Saturday, February 26, 2011

Taxability of Former Duke Lacrosse Players' $60m (?) Settlement

Duke University Logo Detroit News, Ex-Duke Lacrosse Star Insists Tax Bill a 'Mistake':

Nearly four years after receiving an undisclosed settlement from Duke University, Reade Seligmann, one of three lacrosse players exonerated in a racially-charged rape case, owes the IRS almost $6.5 million in taxes, according to public records.

The 24-year-old New Jersey native's lawyer disputes the tax bill, however.

According to a tax lien filed Feb. 17 in New York City, Seligmann owes $6,492,377 in income taxes from 2007. That's the same year Seligmann reached the settlement with Duke.

The amount of the settlement has never been disclosed and is an enduring mystery in one of the most divisive scandals in college sports history. Tax lawyer Jeffrey Freeman of Birmingham, Mich., said someone would have to make about $20 million in one year to generate a $6.5 million tax bill.

The Detroit News asked Seligmann lawyer Richard Emery if the former Duke player received $6.49 million from the university or if the amount represented the taxable portion of the settlement. He also was asked if the Duke settlement was the basis of the tax lien. Emery said "no" and that the amount was inaccurate.

In general, people don't have to pay taxes on settlements stemming from personal injuries, said Freeman, who specializes in civil and criminal tax cases. People generally have to pay taxes on settlements stemming from emotional distress, depression and other symptoms.

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Comments

The Duke case has been replete with innuendo, false press leaks, sensationalism, and
planted stories--all to the detriment of the lacrosse players--from the very start. And
quite likely this is just more of the same, as current lawsuits proceed to resolution.

Seligmann says he first heard about the lien by reading about it in the media.
Yet a lien is not the first step in an IRS process. So there is a problem somewhere.

Second, the amounts are generally conceded to be absurd (in that Duke's settlements with the players is nowhere considered to have been as high as $20 million apiece).

Posted by: R. B. Parrish | Feb 27, 2011 12:56:52 PM

Oops. I guess Duke's lawyers should have drafted that confidentiality agreement a little more tightly. In other news, it looks like the largesse of winner take all credentialism can cover the mistakes born of hyper-political correctness.

Posted by: Matt | Feb 28, 2011 10:05:41 AM