Hi dukeman,
As noted in the disclaimer below, answers provided on Google Answers
are general information, and are not intended to substitute for
informed professional tax, legal, accounting, or other professional
advice. If you need such advice, you should contact a qualified
professional.
Page 27 of IRS Publication 525 states:
"Court awards and damages. To determine if settlement amounts you
receive by compromise must be included in your income, you must
consider the item that the settlement replaces. Include the following
as ordinary income.
1. Interest on any award.
2. Compensation for lost wages or lost profits in most cases.
3. Punitive damages. It does not matter if they relate to a physical
injury or physical sickness.
4. Amounts received in settlement of pension rights (if you did not
contribute to the plan).
5. Damages for:
a. Patent or copyright infringement,
b. Breach of contract, or
c. Interference with business operations.
6. Back pay and damages for emotional distress received to satisfy a
claim under Title VII of the Civil Rights Act of 1964.
7. Attorney fees and costs where the underlying recovery is included
in gross income.
Do not include in your income compensatory damages for personal
physical injury or physical sickness (whether received in a lump sum
or installments)."
"Taxable and Nontaxable Income" (Publication 525) (For use in
preparing 2004 Returns)
Internal Revenue Service
http://www.irs.gov/pub/irs-pdf/p525.pdf
I believe this information responds to your question. If not, please
let me know, so that I may do follow-up research.
- justaskscott
Search strategy --
Browsed IRS web site and Publication 525. |
