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FEDERAL INCOME, ESTATE & GIFT TAX PROJECT 1 (PRELIMINARY DRAFT OF MEMORANDUM SUMMARIZING ITEMS NOT REALLY CONSIDERED IN 1954 CODE)

handle is hein.ali/aliftp0399 and id is 1 raw text is: PRELIMINARY DRAFT OF MEMORANDUM SUMMARIZING ITEMS NOT REALLY CONSIDERED IN 1954 CODE I. GROSS INCOME- A. Damages Section X1051(b)(16) * of the ALl Draft specifically enumerates as an item of gross income Income from damages, including recoveries by suit, settlement, or other wise. .. subject to the exclusion contained in §§X107(d) and 107(e). The latter sections exclude from gross income amounts received as damages on account of personal injuries or sickness or other personal harm subject to certain limitations where offsetting deductions had been previously allowed or where the damages are compensatory for loss of income, Section 61 of the 1954 Code fails to include damages in its enumeration of specific items of gross income. Inclusion of this item would heighten . taxpayer awareness that income from damages should be included in his return. The Code also fails to make specific statutory provision for the exclusion of damages on account of personal harm other than injury or sickness, c. f. §104. The treatment of damages for libel, breach of promise, etc., thus continues to be left to judicial interpretation with no legislative guidance on the handling of such problems as punitive damages, damages representing loss of profit, representing impairment of capital, etc. It is interesting to note that the case law on punitive damages under the 1939 Code has been changed, since the 1954 Code was enacted, from a policy of exclusion to one of inclusion in gross income. Commissioner v. Glanshaw Glass Company, 348 U.S. Section citations preceded by the letter X refer to the ALI Draft; otherwise, the citation is to the 1954 Code.

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