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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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