Kovacs v. Commissioner
United States Tax Court
Ps were awarded damages of $ 995,000 in a Michigan wrongful death action and D appealed. After exhausting its appeals, D paid Ps $ 2,254,741.70, which was the sum of the damages, $ 6,134.53 in costs, and $ 1,253,607.17 in statutory interest.
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Ps were awarded damages of $ 995,000 in a Michigan wrongful death action and D appealed. After exhausting its appeals, D paid Ps $ 2,254,741.70, which was the sum of the damages, $ 6,134.53 in costs, and $ 1,253,607.17 in statutory interest. Held: Sec. 104(a)(2), I.R.C., excludes from gross income "damages received * * * on account of personal injuries". Statutorily imposed "interest" on damages is not included within the exclusionary terms of sec. 104(a)(2). Ps may not exclude the portion of the payment representing interest. Held further: Ps may deduct the portion of their attorney's fees…
1Opinion of the Court
OPINION
Ruwe, Judge:
Respondent determined deficiencies in petitioners’ 1987 Federal income taxes and additions to tax as follows:
Petitioner
Deficiency Addition to tax sec. 6661
Rosemary S. Kovacs $220,572 $55,143
Lois E. Kovacs 34,992 8,748
Mary Ann Kovacs 33,103 8,276
Kathleen L. Kovacs 30,184 7,546
Respondent has conceded the additions to tax under section 6661.2
The primary issue remaining for decision is whether “interest”, which petitioners received pursuant to Michigan Compiled Laws (M.C.L.) section 600.6013 (1987) on “damages” that were awarded to them in a wrongful death action is excluded…
2Cases cited43 opinions
- Cannon v. University of ChicagoSupreme Court of the United States · 1979
- United States v. American Trucking AssociationsSupreme Court of the United States · 1940
- Lorillard v. PonsSupreme Court of the United States · 1978
- Knetsch v. United StatesSupreme Court of the United States · 1960
- Merrill Lynch, Pierce, Fenner & Smith, Inc. v. CurranSupreme Court of the United States · 1982
38 more not listed; retrieve them via the Exa API.
3Cited by49 opinions
- Robinson v. CommissionerUnited States Tax Court · 1994
- Bagley v. CommissionerUnited States Tax Court · 1995
- Rozpad v. CommissionerCourt of Appeals for the First Circuit · 1998
- Delaney v. CommissionerCourt of Appeals for the First Circuit · 1996
- Charles Francisco Cecilia Francisco v. United StatesCourt of Appeals for the Third Circuit · 2001
44 more not listed; retrieve them via the Exa API.