A Man Who Sued Himself (and the IRS) and Won | Hacker News Reader

A Man Who Sued Himself (and the IRS) and Won

nowiknow.com

19 pointspetercooper8 comments

This is kind of a nothing-burger. Corporate officer/shareholder physically injured himself on the job, used his status as an employee to pay himself a legal settlement, which would normally be taxable, but not for physical injury.

The settlement seems too high to me for the relatively minor nature of his injury, but he got around that by hiring separate lawyers to arrive at a "reasonable" number.

The article starts out on a weak note however:

>the general rule is that any money you earn from your business is taxed twice.

No, that's not the "general rule". That is only for corporations which are organized by default under subchapter C of the tax code ("C-corp"). For the very reason of double taxation, most small businesses are indeed organized as pass-through entities, such as S-corp (subchapter S), partnerships, or even sole proprietorships. S-corps in particular are used to reduce self-employment tax (Soc. Security) based on "reasonable compensation" for officer/employees. There is very little reason for a small business owner to choose the C-corp entity.

> This is kind of a nothing-burger.

It might be, but it's interesting enough to read a newsletter about it during one's morning.

Yeah, maybe I should have used "tl;dr" instead.

I admit it isn't as exciting to HN readers as potato diets or the FDA proposing a ban on brominated vegetable oil, but I found it quirky and interesting, particularly with the seemingly unexpected consequence from how the law treats corporations. I'd certainly never have thought about suing my own company if I were injured at work, so hats off to the guy for pulling it off.

Interesting, but this seems like a low-quality source. The article implies that 47.5 + 5 = 100 and that one's wife's sister's wife could be one's brother-in-law. Odd.

The Maxwells [the husband and the wife] owned 47.5% of the business each; the other two split the remaining 5%.

47.5 * 2 + 5 = 100

Maxwell and his wife owned 47.5% each. That's 90%

The remaining 5% was split ammong two other women.

Now i know it's not low quality per se, but it's not journalism either.

It started pretty small, as a newsletter a guy wrote everyday during his commute.

He then quit his job to do this fulltime. I won't comment if this was a bad or good move. The quality hasnt decreased but thr newsletter is now filled with ads.

Wow, he quit his job? He was still working at Sesame Street last time I looked so I missed that change. I had thought it was still just a (pretty successful) side project.

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