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Unformatted text preview: is also taxable only when it is realized as a gain. When the payment from the destroyed property is in excess of the value of the property involved, then that gain is the taxable portion. The personal injury damages are two parts compensation or punitive. The punitive damages are taxable because they are meant to hurt the other individual involved. The compensation damages are from personal injury or physical sickness these payments are not included in gross income and therefore, non-taxable. References: Internal Revenue Service. (2011). Publication 525 - Main Content. Retrieved 6th April ‘11, from IRS.gov: http://www.irs.gov/publications/p525/ar02.html#en_US_publink1000229314 Willis, E., Hoffman, W. H., Maloney, D. M., & Raabe, W. A. (2010). Federal Taxation. Mason: South-Western Cengage Learning....
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- Spring '11
- Taxation in the United States, Willis el al.