Taxpayer received $96,000 in a lawsuit as an independent contractor. I'm assuming the lawsuit proceeds are taxable as self-employment income and should be reported on Schedule C along with other deposits. Since this money represents unpaid commissions, the taxpayer is allowed to deduct the ordinary and necessary business expenses that would normally apply to those earnings, such as mileage, supplies, and attorney’s fees? 

 

Taxpayer said: 

I wasn’t sure what to do with the lawsuit money we were awarded in February and September. It’s showing as straight income with no expenses. That money represents past commission dollars that the company did not pay us timely and we had to file a suit to get back. It’s from over a two year span of time and would have incurred the typical expenses to earn that money.

In this case, since it is a unique case, would it be acceptable to take a percentage off for expenses?