The general view that comparisons and judgments are not taxable in illicit cases simplifies this often complex issue. Practitioners should be informed of developments in legislation and consult with experts who regularly address tax issues and/or recommend that their clients consult with these experts. Doing otherwise could lead to liability for legal wrongdoing, as evidenced by the very narrow appeal of the lawyer involved in Jalali v. Root, although the judgment against Mr. Root was quashed on appeal, the case is worth reading to remind us of the importance of giving specific advice and referring your clients to the practitioner concerned.53 The Court was also strongly influenced by its previous decision in Commissioner v. Schleier32, in which the Court held that section 104 (a) (2) does not apply to liquidated damages awarded under the Age discrimination in employment act. The Court of Justice, in Schleier, found that such compensation has no compensatory function, but is punitive in nature and is therefore outside the exclusion of Section 104 A(2). In the same reasoning in O`Gilvie, the Court found that punitive damages do not fall under Section 104 A) (2) because they constitute an element of damages that is not intended to compensate victims, but is punishable and is intended to sanction the conduct of a defendant. An amendment to the 1996 code expressly provides that the exclusion of income from personal injury income does not apply to punitive damages30 The Supreme Court, which wrote the provisions of the code prior to the amendment, had already ruled that punitive damages were taxable31 The amendment and the Supreme Court`s decision make punitive damages taxable in most cases.

Where only a portion of the claim involved personal injury for assault and the grievor did not set a compensatory award, the total amount may be considered taxable income, particularly if the allegation: That part of the recovery be due to personal injury and is hardly supported.37 If a legal action has no basis for injuries without bodily body, the parties cannot convert an otherwise taxable transaction into a tax-exempt transaction by forming the agreement in the form of a replacement for assault.38 However, if part of the transaction is to be excluded from income, the court may determine the attribution on the basis of the particular circumstances of the underlying rights and taking into account several factors. , including submissions, evidence, terms of transaction and intent of the payer39 Although the terms of the transaction agreement are reviewed by the Tribunal, Not dissatisfied with the question of how to allocate the amount of compensation between taxable and non-taxable debts.40 Allowances that are contrary to the actual circumstances of regulated claims have no weight.41 If an explicit allocation is not not included in an agreement to pay the fees to indecency and non-intrusion, this may lead to: That the largest amount or the total amount of compensation be considered taxable income.42 If an agreement does not explicitly state that the payment is carried out for assault , some courts consider the payer`s intention to make the payment to be the most important factor. 36 53 For a more detailed discussion on the fiscal capacity of comparisons and judgments, see chapter seventeen of Michael Bogdanov, Massachusetts Tort Damages, Second Ed.