I rec'd a $60K award to offset losses of 97K in an arbitrated lawsuit. They sent me a 1099-misc and reported the $60K in box 3...other income. I paid 35% contingency fee to the attorneys and additional $3K of expenses.

How can I offset the income I have to report?...it sure does NOT feel like income, it offset a specific loss of $97K in Fannie Mae preferred stocks (there was no profit or gain...just a reduction of capital.

I live in Texas and took the loss on the stock the same year as the award and fees (2010).