04/29/2025
Dear [RECIPIENT]
Understanding IRS Forms 1099 for Lawsuit Settlements
Tax and Financial News
April 2025
The Basics of Tax Reporting in Legal Settlements
When you collect a settlement for a lawsuit, you'll likely also receive a Form 1099 from the IRS. This form serves as a reminder to pay taxes on your settlement; copies are sent to both you and the IRS. These forms match reported income for income tax purposes, making them critical for accurate tax filing.
In lawsuit contexts, two common forms 1099 are issued:
- Form 1099-MISC: This version can include various types of settlement payments, often termed other income
- Form 1099-NEC: Used specifically for non-employee compensation
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Valuation Ratio Calculating the EV / 2P
General Business News
April 2025
When it comes to analyzing a company’s financials, there are many avenues we can take. One way is through multiples; calculating the EV/2P multiple is the focus of this analysis.
This ratio looks at a business' enterprise value against its proven and probable 2P reserves. While ratios or multiples are used in valuing companies, this metric is used chiefly to value gas and oil companies for energy sector analysts. Analysts use this calculation to determine the likelihood that a company's reserve resources can underpin its functioning and expansion efforts. Along with the ratio, analysts use micro and macro factors to determine a company's financial health, its growth prospects, and whether the business is undervalued or overvalued.
This multiple is similar in comparison to other valuation multiples such as Price-to-Book (P/B), Price-to-Earnings (PE), Enterprise Value/Earnings Before Interest, Taxes, Depreciation, and Amortization. While these other metrics can also value an oil or gas company, understanding how it's calculated is essential to why it is sector specific.
Breaking Down the EV/2P Ratio
EV = Market Value of Equity + Market Value of Debt – Cash and Cash Equivalents
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7 Ways to Teach Your Kids to Save
Tip of the Month
April 2025
Of all the things you teach your kids when they’re young, saving money just might be one of the most important. Teaching them to delay gratification could help them avoid unnecessary spending and help them learn to value controlling their money. Here are some tips you can use to educate them about this crucial life skill.
Discuss Wants Versus Needs
Often, when your child says, “I need this” he really means “I want this.” Should you hear this, think of it as an opportunity to help him understand the difference between the two. You might explain that a need includes food, shelter, and clothing, while a want is an extra like candy, video games, or the latest pair of sneakers. You can even quiz children at home by pointing out things and asking them if they are needs or wants. This tool can work wonders.
Allow Your Kids to Earn Money
Whether it’s raking leaves or cleaning the house, chores are one of the best ways to teach young ones both the value of work and the value of money – and saving it.
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I am a fractional and interim CFO who helps small and medium-sized businesses in Maryville TN.
