Practice Area

Structured Settlements

Present value analysis of structured settlement offers under IRS Section 451 principles.

Core Services

Present value of annuity streams
IRS Section 451 analysis
Comparison to lump-sum equivalents
Tax-aware modeling

Structured settlements convert what would have been a lump sum into a stream of periodic payments. Evaluating an offer — or constructing one — requires translating the payment stream back into present value at a defensible discount rate and accounting for the tax treatment under IRS Code Section 451.

Dr. Pettingill has prepared structured settlement valuations for plaintiffs and defendants in personal injury, wrongful death, and qualified-assignment matters. The analysis identifies the implicit discount rate the offering party is using, compares it to the prevailing risk-free curve, and quantifies the difference in dollar terms.

Frequently Asked

What is IRS Code Section 451?

Section 451 governs the timing of income recognition. In the structured settlement context, periodic payments from a qualified assignment are excluded from gross income under Section 104(a)(2) and the constructive receipt rules of Section 451, which is what makes the after-tax comparison to a lump sum meaningful.

Why retain an economist on a structured offer?

Because the headline payout almost always overstates economic value. The economist converts the future payment stream to present value using a transparent, market-based discount rate so the parties can compare apples to apples.

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