Punitive Damages

Question 1

Punitive damages

Answer 1

Aren’t excludable.

Question 2

punitive damages for defendant business

Answer 2

are deducitble as a business xpense .

Question 3

Exxon example issue

Answer 3

damage award of 1 million against, but due to their tax rate, this dedudciton wil save them 300k in taxes. so the award only really costs them 700k.

Question 4

how to handle?

Answer 4

eliminate deduction. But we know corps dont pay taxes or pay damages, its pased one. best solution is for P to argue to multiply compensatory, to really punish D