Taxation of back pay awards under Title VII: Supreme Court decides U.S. v. Burke
Article Abstract:
The Supreme Court determined in U.S. v Burke that Civil Rights Act of 1964 Title VII remedies were not tort-like damages and therefore not excludible from gross income under IRC section 104. The case's issue was whether back pay damages for employment discrimination cases were the result of personal injuries or sickness or whether they were payments in response to a contract violation. This decision clarifies an area of case law that has been interpreted very differently by many courts. Remedies under other antidiscrimination statutes with broad remedy ranges are excludible.
Publication Name: Taxes: The Tax Magazine
Subject: Business
ISSN: 0040-0181
Year: 1992
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Revisiting the tax treatment of discrimination awards and settlements after Burke
Article Abstract:
The US Supreme Court decision in United States v. Burke failed to resolve the controversy over whether settlements of discrimination cases were taxable under IRC section 104(a)(2). Burke held that a tort-like settlement is required for exclusion from taxation. However, the case failed to resolve the conflict between claim-based and remedy-based rulings as shown by Downey. The Tax Court ruled, in Downey, that all damages were excludable using a claim-based theory without consideration to the portion of damages that were back pay and therefore should have been taxed.
Publication Name: Taxes: The Tax Magazine
Subject: Business
ISSN: 0040-0181
Year: 1993
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Supreme Court decides Newark Morning Ledger Co
Article Abstract:
The US Supreme Court decision in Newark Morning Ledger Co v. United States resolved the conflict over lower court decisions concerning the depreciation of customer-based intangibles. The Court held that customer-based intangibles are depreciable under IRC section 167 as long as they have a value that reduces over an ascertainable time period. This decision limits the definition of goodwill to residual assets rather than anything with the expectancy of continued customer patronage. The Court also supported the income approach for valuing subscription lists.
Publication Name: Taxes: The Tax Magazine
Subject: Business
ISSN: 0040-0181
Year: 1993
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