Open Access. Powered by Scholars. Published by Universities.®
Articles 1 - 2 of 2
Full-Text Articles in Taxation-Federal
Taxation Of Punitive Damages: Interpreting Section 104(A)(2) After The Revenue Reconciliation Act Of 1989, Craig Day
Washington Law Review
The Internal Revenue Service and the courts have wavered on whether punitive damages are taxable under the Internal Revenue Code. Just after the Fourth Circuit boldly declared that punitive damages are taxable, Congress amended section 104(a)(2) to tax punitive damages in cases where no physical injury is involved. Neither the courts nor the Internal Revenue Service have answered the question whether punitive damages in cases that do involve physical injury are taxable. This Comment examines the language of the amended statute and the policies leading to its enactment, and proposes that punitive damages be taxed without regard to the nature …
Tax-Free Security: Federal Income Taxation Of Customer Deposits After Commissioner V. Indianapolis Power & Light Co., 110 S. Ct. 589 (1990), Alisa Eid
Washington Law Review
In Commissioner v. Indianapolis Power & Light Co., the Supreme Court held that a taxpayer receiving a customer deposit to secure future payment for goods or services may exclude that deposit from income if the taxpayer obligates itself to refund the deposit and if the customer retains the right to cancel service at any time. Because these conditions characterize virtually all security deposits, the Court's rule will allow taxpayers to exclude most security deposits from income. This Note examines the Court's decision and suggests that the Court's rule should not be extended to any situation where either the obligation to …