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Article: Punitive damages taxable, Supreme Court says.
- Article from:
- Trial
- Article date:
- March 1, 1997
- Author:
CopyrightCOPYRIGHT 1997 American Association for Justice, formerly Association of Trial Lawyers of America (ATLA®). This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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Plaintiffs who won punitive damages awards before August 20, 1996, must share them with the federal government, according to a recent Supreme Court opinion.
In a 6-3 decision, the Court ruled that punitive damages awarded before that date are subject to federal income tax. (O'Gilvie v. United States, Nos. 95-966, 95-977 (U.S. Dec. 10, 1996).) Most punitive damages awarded since that date have been taxable under the Small Business Protection Act of 1996.
The case arose out of a tort suit against a tampon manufacturer brought by the family of a woman who died of toxic shock syndrome. The woman's family was awarded about $1.5 million in compensatory ...