by John Darer CLU ChFC MSSC CeFT RSP CLTC
Chegg is an American education technology company based in Santa Clara, California. Their stated mission is "to improve learning outcomes by putting students first". They claim to support students on their journey from high school to college and into their career with tools designed to help them learn their course materials, succeed in their classes, save money on required materials, and learn the most in-demand skills". Chegg company stock flourished during the Covid 19 pandemic, but it's less than 10% of its all time high (as of February 12, 2024).
Chegg Fails Students with Botched "Problem Solve" About Structured Settlement
As part of my Structured Settlement Watchdog role, my mission includes clearing the path to accurate structured settlement information. Chegg doesn't deliver when it comes to structured settlements, on this showing, and not for the first time either. Check out this Chegg botched "Problem Solve":
"An individual or corporation wins a civil action, and a settlement is generated and negotiated as a result. A resolution often involves a one-time lump amount of cash to address immediate expenditures, followed by tax-free, assured recurring repayments tailored to the settlement winner's requirements. Large future compensations have lately been paid through a regular intervals deal, often referred to as a structured settlement". Chegg Problem 35TF Chapter 7 Tort Law (6th) Edition 1305537576 9781305537576
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SIDE BAR
"Regular Intervals Deal"? Did you know that structured settlement payments could be paid "spasmodically"? How about learning how to calculate the present value of that?
Spasmodically...At uneven or varying rates or intervals Source: WordHippo
Types of Structured Settlement Payments | 2024 Structured Settlement Options (4structures.com)
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A Business Entity Cannot Suffer a Personal Injury
IRC Section 104(a)(2) provides, in general, that gross income does not include the amount of any damages received (whether by suit or agreement) on account of personal physical injuries or physical sickness.
Section 1.104-1(c)(1) of the Income Tax Regulations provides that the term “damages received (whether by suit or agreement)” means an amount received through prosecution of a legal suit or action based upon tort or tort type rights or through a settlement agreement entered into in lieu of such prosecution.
Section 1.104-1(c)(1) further provides “damages for emotional distress attributable to a physical injury or physical sickness are excluded from income under section 104(a)(2).”
See also Section 1605 of the Small Business Protection Act of 1996, H.R. Conf. Rep. No. 104-737, at 301 (1996), reprinted in 1996 U.S.C.C.A.N. 1474, 1793 (legislative history notes that “… the exclusion from gross income applies to any damages received based on a claim of emotional distress that is attributable to the physical injury or physical sickness.”).
Section 1605 of the Small Business Protection Act of 1996 limits the exclusion from gross income provided by section 104(a)(2) to amounts received on account of personal physical injuries or physical sickness. The legislative history to the 1996 amendment provides: … If an action has its origin in a physical injury or physical sickness, then all damages (other than punitive damages) that flow therefrom are treated
as damages received on account of personal physical injuries or physical ickness whether or not the recipient of the damages is the injured party. For example, damages (other than punitive damages) received by an
individual on account of a claim of loss of consortium due to the physical injury or physical sickness of such individual’s spouse are excludable from gross income
"Because a business entity cannot suffer a personal injury within the meaning of IRC § 104(a)(2),
P & X Markets, Inc. v. Commissioner, 106 T.C. 441 (1996), aff’d in unpublished order, P & X
Markets, Inc. v. Commissioner, 139 F. 3d 907 (9th Cir. 1988), this guide applies to recoveries by
individuals only". Source: Lawsuits, Awards, and Settlements Audit Techniques Guide (Internal Revenue Service Rev.5/11/)
Settlement "Winners"?
A settlement is a compromise. According to the Legal Information Institute at Cornell law School, a settlement is "an agreement that ends a dispute and results in the voluntary dismissal of any related litigation". settlement | Wex | US Law | LII / Legal Information Institute (cornell.edu)
Why not educate students and lifelong learners with accurate real world information that is of practical use?
I've previously criticized Chegg in two 2021 posts
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