Damages Awards for Wrongful Imprisonment Should Be Tax Free

Wood and Porter partner Rob Wood, host of the Tax Law Channel writes in the Los Angeles Daily Journal: "It's hard to imagine a more compelling case for tax free treatment than being wrongfully confined behind bars."

A recent US Tax Court case says these damages awards may be taxable.

"The news is full of stories about wrongfully convicted prisoners released
from custody after years of incarceration. Often, they receive some kind of compensation. Whether the payment is large or small, it can rarely make up for
what sometimes turns out to be a ruined life. Most such unfortunates are shocked to learn they may have tax problems too. When a person is vindicated and receives compensation for unlawful incarceration, recent IRS releases suggest it may be taxable. That is indefensible."

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LBN host Scott Drake interviews Rob Wood.