So, it’s been a fun week on taxgirl.com. There’s been lots of commentary about Murphy v. IRS – both on and off the blog. I’ve appreciated your comments and emails. I thought, in light of the ongoing discussions, I’d make it my “Fix the Tax Code Friday” question. Here we go:
Should any court awards be subject to taxation? Should any specifically be exempt?
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{ 2 comments… read them below or add one }
imho all forms of compensation should be taxed-including court awards. With the caveat that if the court award is to make someone ‘whole’ again then the amount of the award should be increased by the amount of the taxes due and the ‘losing’ party should pay the taxes (so that the awardee is not punished by having to pay additional taxes, nor are they burdened with having to file it).
So, if you loose a leg, you don’t get taxed, but if you lose your mind, you do. Can’t be considered fair by any standard.