<prompt> Human: Long story, but we received 30,000 to walk away from a real estate deal that the other couple was contractually bound to complete. They knew they would loose in court so they paid us 30k to stay out of court and to have us walk away from the deal. After some consulting with a CPA his best take on the money is that its a short term capital gains payment - which will be fully taxed 25 as income and require quarterlys. We are still investigating the options for reducing the tax burden on this money by giving some to our early teen daughters or dumping some into a Roth 401k or whatever to help prevent the entire 30k from being taxed at 25. Any thoughts on how to best handle this money? Assistant: You can give some to your daughters but I dont believe thats going to help. Its true that you can give, up to certain limits, to family tax free, but you still have to pay tax on income which is what your settlement is.Do you and your spouse still work? The easiest thing to do would be to up your regular not Roth 401k contributions up to the max in order to defer as much income as possible. Human: Thanks for the advice. That was my initial thought - the check would have to be made out to them and not funneled through us. We do both work, I will investigate the 401k option. Thanks again!  <response>: To be clear, 401k contribution must come from payroll deductions. What Wolfpack is saying is to bump up your traditional 401k contributions to counter balance this income. If you are already contributing the max to your 401k, there is not much you can do. 