Legal Remedies Commons^™

Congress's Amendment To Section 104 Of The Tax Code Will Not Clarify The Tax Treatment Of Damages And Will Lead To Arbitrary Distinctions, Sharon E. Stedman

Seattle University Law Review

This Note examines the recent amendment of I.R.C. § 104 and argues that the amendment will not clarify the tax treatment of damages but will instead lead to inequitable results and arbitrary distinctions. Part I explores the policy justifications for the exclusion of damage awards from gross income and provides a brief overview of section 104. Next, in Part II, the article reflects upon the tax treatment of damages prior to the recent amendment. In doing so, Part II focuses on the relevant case law and revenue rulings. Turning toward the tax treatment of damages under the new amendment, Part …