Compensatory Damage Awards for Nonphysical Personal Injuries: The Murphy Pendulum

The Murphy case involves the question of whether compensatory damage awards received for nonphysical personal injury are subject to the federal income tax. Such awards had been excluded from a taxpayer's gross income since 1918, but in 1996, Congress amended I.R.C. Sec. 104(a)(2) with the intention of taxing these awards. The taxpayer (Murphy) received an award for nonphysical personal injuries after the 1996 amendment and has argued in three judicial proceedings that, despite the amendment, her award is not taxable. This paper traces the path of the Murphy case through the IRS and the courts, discusses the income tax issues raised in the various forums, and makes recommendations to clarify and improve the federal income tax treatment of compensatory damages for nonphysical personal injury.

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Contingent Legal Fees on Settlements and Awards and the Calculation of Gross Income by Individuals for United States Federal Income Tax Purposes

The ATA Journal of Legal Tax Research ◽

10.2308/jltr.2004.2.1.1 ◽

2004 ◽

Vol 2 (1) ◽

pp. 1-12

Author(s):

Michael P. Coyne ◽

Richard Mason ◽

John R. Mills

Keyword(s):

Income Tax ◽

Internal Revenue Service ◽

Current Position ◽

Significant Difference ◽

The Supreme Court ◽

Federal Income Tax ◽

Gross Income ◽

Legal Fees ◽

Circuit Courts ◽

Congressional Action

Lawsuits involving contingent legal fees are reasonably common. This paper focuses on the appropriateness of the inclusion in plaintiff's gross income for individual federal tax purposes of the portion of settlements going to attorneys for contingent legal fees. We present an example of the significant difference in taxes payable by a plaintiff under the two competing tax treatments. We also recap the current position of the various Circuit Courts on the issue using the opposing views of the Sixth to the Second and Seventh Circuits to frame a discussion of the issue and then discuss the treatment of securities classaction settlement proceeds that are apparently treated differently for tax purposes. The Supreme Court has recently granted certiorari in two cases and will be addressing the inclusion of contingent legal fees in gross income. We advocate that although taking the broader Sixth Circuit approach of excluding contingent attorney's fees on a joint endeavor theory would lead to more equitable results for plaintiffs, it would not necessarily be prudent judicial action and that the appropriate remedy to the situation may best be Congressional action, as the Internal Revenue Service has consistently favored inclusion.

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Social Security Benefits Taxation: Issues And Present Status

Journal of Business & Economics Research (JBER) ◽

10.19030/jber.v10i12.7421 ◽

2012 ◽

Vol 10 (12) ◽

pp. 659

Author(s):

Ralph B. Fritzsch ◽

Neal R. VanZante ◽

Catherine Gaharan

Keyword(s):

Social Security ◽

Income Tax ◽

Tax Law ◽

Font Size ◽

Tax Rate ◽

Taxable Income ◽

Current State ◽

Federal Income Tax ◽

Gross Income ◽

Social Security Benefits

Taxation of Social Security benefits was introduced in 1983 as part of a general restructuring of Social Security. As part of the 1993 Omnibus Budget Reconciliation Act, taxation of benefits was revised and expanded. Inclusion of social security benefits as part of taxable income is determined by comparing a modification of adjusted gross income and half of social security benefits to threshold amounts established in each tax law. Unlike most amounts used to determine tax, the thresholds were not subject to indexation or revision. This paper examines the current state of social security taxation in light of personal income changes, social security benefit revisions and federal income tax rate and bracket modifications that have taken place over the fourteen years since the last revision in taxation of benefits.

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Assessment of Damages for Permanent Incapacitating Injuries

Alberta Law Review ◽

10.29173/alr2345 ◽

1969 ◽

pp. 430

Author(s):

Donna Lea Hawley

Keyword(s):

Income Tax ◽

Total Loss ◽

Personal Injury ◽

Damage Awards ◽

Future Earnings ◽

The Past ◽

Future Care ◽

The Cost ◽

Actual Loss

Within the last year personal injury awards in Canada have been assessed for amounts far exceeding those in the past. This paper examines the basis on which personal injury awards have been and are assessed. The treatment of this topic is delimited by restricting the discussion to only those awards made for serious per sonal injuries—those that permanently incapacitate the plaintiff to major ex tent. While once global awards were assessed to provide compensation for the total loss of the plaintiff, there now appears to be trend towards assessment of damages for the actual loss of the plaintiff. Usually, the two most important heads of damage are loss of future earnings and cost offuture care. Of these two it is the cost of future care which has been the primary cause of the dramatic increase in damage awards. Non-pecuniary damages are now usually given somewhat minor consideration in the awards. Other considerations on assessment examined in clude income tax, considerations on appeal and the use of juries.

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Depletion of Oil and Gas Properties as a Deduction from Gross Income under the Federal Income Tax

Harvard Law Review ◽

10.2307/1333405 ◽

1938 ◽

Vol 51 (8) ◽

pp. 1424

Keyword(s):

Income Tax ◽

Oil And Gas ◽

Federal Income Tax ◽

Gross Income ◽

Gas Properties

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Discovery of Forensic Engineering Records

Journal of the National Academy of Forensic Engineers ◽

10.51501/jotnafe.v9i1.497 ◽

1992 ◽

Vol 9 (1) ◽

Author(s):

Jack Larks

Keyword(s):

Income Tax ◽

Product Liability ◽

Personal Injury ◽

Expert Witnesses ◽

Forensic Engineering ◽

Gross Income ◽

Opening Statements

Mr. Expert - how much did you make last year testifying for attorneys involved in litigation such as this case? or What was your total or gross income last year? or I demand that you furnish a copy of your income tax return for the last three years or seven years. or How much of your income comes from being hired to testify in personal injury or product liability cases? It does not take much analysis to show that this type of questioning is harassing, intimidating and discourteous. It also shows that there are pitfalls for unwary expert witnesses who will hear their answers from deposition transcripts on previous trials being used in opening statements or cross examination to show that they are hired guns, bought and paid for experts, biased, legal prostitutes, etc. This is especially true if they have allowed themselves to be coerced or intimidated into revealing their income or furnishing records of same.

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