What Are Some Of The Federal Tax Rules That Make Structured Settlements Beneficial?

In The Periodic Payment Settlement Act of 1982 (P.L. No. 97-473), Congress adopted specific tax rules to encourage the use of structured settlements to resolve physical injury cases.

Section 104(a)(2) of the Internal Revenue Code clarifies that the full amount of the structured settlement payments is tax-free to the victim.  (By contrast, the investment earnings on a lump sum payment are usually fully taxable.)