Page 173 - Other Income for Individuals

Court awards and damages.

Court awards and damages. Court awards and damages.

 To determine if settlement amounts 4. Amounts received in settlement
you receive by compromise or of pension rights (if you didn’t
judgment must be included in your contribute to the plan).
income, you must consider the item 5. Damages for:
that the settlement replaces. 1. Patent or copyright
 The character of the income as infringement,
ordinary income or capital gain 2. Breach of contract, or
depends on the nature of the 3. Interference with
underlying claim. business operations.
 Include the following as ordinary
income.
Court awards and damages.

Court awards and damages. 6. Back pay and damages for
emotional distress received to satisfy a
1. Interest on any award. claim under title VII of the Civil Rights
2. Compensation for lost Act of 1964.
wages or lost profits in 7. Attorney fees and costs (including
most cases. contingent fees) where the underlying
3. Punitive damages, in recovery is included in gross income.
most cases. It doesn’t 8. Attorney fees and costs relating to
matter if they relate to whistleblower awards where the
a physical injury or underlying recovery is included in gross
physical sickness. income.

/!\ Don’t include in your income compensatory damages
for personal physical injury or physical sickness (whether

received in a lump sum or installments). /!\ 171