Does this guy have to pay tax on this money?

[disneykid52]

What is the name of your state (only U.S. law)? FL

Heres an article (copied and pasted here) Does this guy have to pay tax on the money?

"TALLAHASSEE, Fla. -- The state senate approved a nearly $1 million payment for a man who was imprisoned for 27 years before being cleared on murder charges and released.

William Dillon was convicted of murder 30 years ago in the death of James Dvorak in Brevard County. Evidence that led to his conviction was later discredited and new DNA tests were performed in 2007. Based on new information, Dillon was released in 2008.

On Wednesday, the Florida Senate voted unanimously to pay Dillon $810,00 in compensation for his time spent in jail."

 

[OHRoadwarrior]

Depends on how the state characterizes the payment.

 

[davew128]

Depends on how the state characterizes the payment.

I don't how that is at all determinative. It would only be tax exempt if reimbursement for some sort of physical damage and given that prisoners get free health care, that seems unlikely.

 

[LdiJ]

I don't how that is at all determinative. It would only be tax exempt if reimbursement for some sort of physical damage and given that prisoners get free health care, that seems unlikely.

I vaguely remember researching a similar issue for a masters class years ago and if I remember correctly, its not taxable. I would have to research it again but I seem to remember that there is case law on the subject.

 

[anteater]

Who is denny crain?

Chief Justice of the Supreme Court.

 

[OHRoadwarrior]

Pain and suffering is not taxable. Reimbursement for lost income over the years is taxable. The person's attorney should specify to avoid tax consequences.

 

[davew128]

Pain and suffering is not taxable. Reimbursement for lost income over the years is taxable. The person's attorney should specify to avoid tax consequences.

The person's attorney has nothing to do with it. The state is awarding him money to compensate for the time he was wrongfully imprisoned.

 

[davew128]

Chief Justice of the Supreme Court.

Denny Crane.

 

[davew128]

I vaguely remember researching a similar issue for a masters class years ago and if I remember correctly, its not taxable. I would have to research it again but I seem to remember that there is case law on the subject.

A quick google search indicates that at least at the federal level there is no clear guidance but at least one attorney put forth two arguments that it should not be taxable. Not sure I buy them but it is interesting reading. http://www.woodporter.com/Publications/Articles/pdf/are_false_imprisonment_recoveries_taxable.pdf

 

[anteater]

Denny Crane.

Oh... that Denny Crane.

 

[OHRoadwarrior]

The person's attorney has nothing to do with it. The state is awarding him money to compensate for the time he was wrongfully imprisoned.

The persons attorney is the one handling the settlement. He most certainly has everything to do with it. A settlement for wages is only worth about 2/3rds what a settlement for pain n suffering is. It is his function to negotiate characterization and settlement amounts.

 

[Proserpina]

Chief Justice of the Supreme Court.

*giggling quietly in the corner*

Cute.

 

[davew128]

The persons attorney is the one handling the settlement. He most certainly has everything to do with it. A settlement for wages is only worth about 2/3rds what a settlement for pain n suffering is. It is his function to negotiate characterization and settlement amounts.

Let me make this simple for you: THERE IS NO SETTLEMENT. I guessed you missed the part where the state senate passed a bill (which will become a law when signed) awarding this man money. HIS LAWYER HAS NO PART IN THE PROCESS. "TALLAHASSEE, Fla. -- The state senate approved a nearly $1 million payment for a man who was imprisoned for 27 years before being cleared on murder charges and released." It is HIGHLY unlikely the state will "characterize" the payment. it is not in its interest to do so and would be very bad PR.

 

[James T Kirk]

Oh... that Denny Crane.

I'm pretty sure I know what Denny would do ...