News & Events

News & Events

1.26.2015

Recent Tax Court Decision Addresses the Tax Treatment of Amounts Received for Anticipated Injuries

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Lane Powell Attorney Jeremy Babener authored an article titled “Recent Tax Court Decision Addresses the Tax Treatment of Amounts Received for Anticipated Injuries.” In the article, Babener examines a recent tax court decision that addresses the treatment of amounts received by a taxpayer in anticipation of incurring future harm.

Instead of damages, the Tax Court in Perez concluded that Perez received compensation “for services rendered.” The court noted the “mischief” that could result from a contrary finding, pointing out that taxpayers receiving compensation for performing painful and dangerous physical services, such as boxing or working in a mine, could argue that a portion of their compensation was non-taxable.