What damage awards are excludable from gross income?

Article Abstract:

The Supreme Court has already offered a two-part test for excluding damage awards from gross income. Based on its decision on the 'Schleier' case, the court holds that the claim must be based on a tort or tort-like claim. This decision is dependent on the remedies available. Acceptable remedies include compensation for suffering and pain, emotional distress, harm to reputation, and loss of enjoyment of life. The second part of the test requires that the amounts be received on account of personal injuries or sickness. However, punitive damages obtained on account of physical injury or sickness are not excludable. Despite this two-part test, confusion still remains in determining if damage awards or excludable or not, as evidenced by the Ninth Circuit's decision in 'Banks.'

Cases, Income tax, Damages, Damages (Law), Commercial arbitration

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Underground storage tanks - new tax guidance for cleanups

Article Abstract:

The IRS has provided supplemental guidance regarding the environmental cleanup costs of removing and replacing underground storage tanks in Revenue Ruling 98-25 issued in Apr 1998. The ruling supplements ruling 94-38 which concerns soil remediation and groundwater treatments. Current deductions are allowed under specified circumstances. The limited scope of both rulings requires further guidance in areas such as asbestos abatement.

Administration of Air and Water Resource and Solid Waste Management Programs, Tax Deductions & Exemptions, Pollution Control & Abatement, Tax deductions, Pollution control, Waste disposal in the ground, Underground waste disposal

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Guidance for recovering environmental cleanup costs

Article Abstract:

The authors discuss IRS guidance controlling the tax treatment of environmental cleanup expenses. The discussion focuses on rules concerning when and if tax deductions can be taken under IRC section 162 or if the expenses must be capitalized under IRC sections 263 or 263A .

United States, Tax Law, Tax accounting, Expense deductions

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