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Court Tosses Federal Tax Statute covering Emotional Damages

It is not every day that a Circuit Court of Appeals sets aside as unconstitutional a federal tax statute. When the taxability of untold millions of dollars of personal injury settlements and verdicts is affected, people generally take note. The U.S. Court of Appeals for the Fifth Circuit on Aug. 22 struck down as unconstitutional an amendment made to Code ' 104(a)(2) (All references to the Code are to the Internal Revenue Code of 1986 as amended). If the decision stands, it could be one of the most significant tax developments in decades.

14 minute read October 30, 2006 at 12:35 AM
By
Scott P. Borsack
Court Tosses Federal Tax Statute covering Emotional Damages

It is not every day that a Circuit Court of Appeals sets aside as unconstitutional a federal tax statute. When the taxability of untold millions of dollars of personal injury settlements and verdicts is affected, people generally take note.

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