Question

Determine the taxability of the damages received in each of the following situations: a. Helio Corporation sues Wrongo Corporation, charging that Wrongo ma false statements about one of Helio's products. Helio claims that the state- ments injured its business reputation with its customers. The court award nd Helio $2,000,000 in damagesb. Lien is injured when a chair on a ski lift she is riding on comes loos shes to the ground. Lien sues the ski resort and receives $12,000 in full ayment of her medical expenses, $4,000 for pain and suffering, and $6,500 lost while she recovers from the accident. The company that manu- cra for income tured the ski lift also pays Lien $50,000 in punitive damages. in Medicare fraud. The court rules that the report was made with reckless disregard for the tru $200,000 for loss of his casting company reports that Dr. Henry Mueller was engaged doctor is incensed and sues the company for libel. The c. A major broad th and awards Mueller $20,000 for the humiliation he suffered because of the allegation ion, and S150,000 in punitive dama

Answer 1

The taxability of the damages received for each situation are:

A) $2,000,000 is Taxable

B) $50,000 is Taxable; $4,000 + $6,500 + $12,000 = $22,500 are Non Taxable

C) $20,000 + $150,000 + $200,000 = $370,000 is Taxable

Step-by-step explanation:

a)

Taxable All punitive damages are taxable , so $2,000,000 shall be taxable because it cannot be stated as personal physical injures.

b).

Taxable All punitive damages are taxable , so $50,000 from the lift manufacturer is taxable.

Non taxable are damages for pain & suffering $4,000. Damages for income loss $6,500. Medical expenses reimbursement $12,000 .

c.)

Taxable are Punitive damages are taxable so , $150,000 is taxable. Loss of business reputation is taxable , so $200,000 is taxable. $20,000 received for humiliation is taxable