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The Constitutionality Of Taxing Compensatory Damages For Mental Distress When There Was No Accompanying Physical Injury, Douglas A. Kahn
The Constitutionality Of Taxing Compensatory Damages For Mental Distress When There Was No Accompanying Physical Injury, Douglas A. Kahn
Articles
Since 1919, statutory tax law has excluded from gross income compensatory damages received on account of a personal injury or sickness.1 The current version of that exclusion is set forth in section 104 (a) (2) of the Internal Revenue Code of 1986.2 The construction of that exclusion, both by the courts and by the Commissioner, underwent significant alterations over the 80-year period that the provision has existed.3 The statute itself was amended several times, most recently in 1996.4 It is the 1996 amendment that has raised a constitutional issue concerning the validity of a portion of the statute.5
Taxation Of Damages After Schleier - Where Are We And Where Do We Go From Here?, Douglas A. Kahn
Taxation Of Damages After Schleier - Where Are We And Where Do We Go From Here?, Douglas A. Kahn
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This article will examine the reasoning of the Schleier decision and speculate as to how taxation of pre-1996 damages will likely apply in light of Schleier. First, the article will set forth a very brief history of the judicial and administrative constructions of the statutory exclusion, and explore tax policy justifications for providing an exclusion from gross income for certain damages. These latter two items (set forth in Parts II and III of this article) are areas that have been extensively addressed previously by several commentators, including the author of this article.' The reason for exploring tax policy issues is …
Compensatory And Punitive Damages For A Personal Injury: To Tax Or Not To Tax, Douglas A. Kahn
Compensatory And Punitive Damages For A Personal Injury: To Tax Or Not To Tax, Douglas A. Kahn
Articles
Since the adoption in 1919 of the Revenue Act of 1918, damages received on account of personal injuries or sickness have been excluded by statute from gross income.1 This exclusion, which does not apply to reimbursements for medical expenses for which the taxpayer was previously allowed a tax deduction,2 is presently set forth in section 104(a)(2). One might expect that a provision having recently attained the ripe age of 75 years without change in its basic language would have a settled meaning. However, recent litigation under section 104(a)(2) bristles with unsettled issues. Does the exclusion apply to punitive damages? To …
Hiring Ruled Contractual, Bill Gore, Douglas A. Kahn, Stan Shields
Hiring Ruled Contractual, Bill Gore, Douglas A. Kahn, Stan Shields
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On December 29, 1988, the California Supreme Court decided Foley vs. Interactive Data Corp., perhaps the most eagerly awaited state supreme court decision in years. The Foley ruling, which immediately was hailed as a tremendous victory for California employers, eliminated punitive damage awards for many wrongfully terminated employees. That was good news for the employers. The decision, however, also provided employers with sobering news. Most significantly, the court ruled that employment relationships essentially are contracts, with terms created by the reasonable expectation of the parties. Thus, the majority of California employees now have a right to sue for breach …
Emotional Disturbance As Legal Damage, Herbert F. Goodrich
Emotional Disturbance As Legal Damage, Herbert F. Goodrich
Articles
MENTAL pain or anxiety the law cannot value, and does not pretend to redress, when the unlawful act complained of causes that alone. Lord Wensleydale's famous dictum in Lynch v. Knight will serve as a starting point for this discussion. His lordship's notion of mental pain is evidently that of a "state of mind" or feeling, hidden in the inner consciousness of the individual; an intangible, evanescent something too elusive for the hardheaded workaday common law to handle. Likewise, in that very interesting problem regarding recovery for damages sustained through fright, it is always assumed, tacitly or expressly, that mere …
Fright Without Physical Impact But Resulting In Physical Injury, Joseph H. Drake
Fright Without Physical Impact But Resulting In Physical Injury, Joseph H. Drake
Articles
The recent Maryland case of Green v. T. A. Shoemaker & Co., reported in 73 Atlantic Reporter, 688, (June, 1909) puts this jurisdiction squarely on the side of those courts that do allow recovery for fright alone, if physical injury is caused thereby. The court confesses that "the numerical weight of authority supports the general rule that there can be no recovery for nervous affections unaccompanied by contemporaneous physical injury," but nevertheless holds firmly with the minority of the courts to the view that there are exceptions to this rule and that this case falls within the exceptions.