Tax,
Alternative Dispute Resolution
Apr. 15, 2026
Do tax dangers lurk in binding term sheets at mediation?
Even when a mediation ends with a binding term sheet, the possibility that it becomes the only agreement should make you think about addressing tax issues upfront.
Robert W. Wood
Managing Partner
Wood LLP
333 Sacramento St
San Francisco , California 94111-3601
Phone: (415) 834-0113
Fax: (415) 789-4540
Email: wood@WoodLLP.com
Univ of Chicago Law School
Wood is a tax lawyer at Wood LLP, and often advises lawyers and litigants about tax issues.
Mediation is nonbinding, but the goal is a binding deal. If a case is resolved, there may be a handshake, an unsigned term sheet, a signed term sheet or a full-blown settlement agreement. In my experience, the most common conclusion of successful mediation is a signed term sheet that contemplates a comprehensive settlement agreement later. But that is not universal.
There may be a mere exchange of emails or an unsigned mediator's proposal. Moreover, if there is a term sheet, it...
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