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Posted by cpabakem01 on April 30, 2008, 1:17 pm
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wrote:
> The Florida legislature has passed with but one negative vote
> -- not yet signed by the Governor -- a bill that would pay wrongfully
> imprisoned persons $50,000 per year of imprisonment, with a maximum of
> one million dollars.
>
> http://www.miamiherald.com/news/florida/story/514849.html
>
> The question is: Is this federal taxable income?
>
> (Note: I have no personal interest in this matter other than curiosity.)
California: Not Taxable http://tinyurl.com/4t5le7
CT: Not Taxable
While the amount proposed is substantial, you should also be aware
that it is the position of the IRS that any compensation that Mr.
Tillman or others like him receives for anything other than “physical
injury” is income for federal tax purposes and would be taxable at a
rate of 35%. While Mr. Tillman would contest this with the IRS, there
is a strong possibility that he would have to pay federal income taxes
on the award of up to $1.75 million. The bill does provide that the
award would be exempt from state income tax purposes.
Milt Baker CPA
Michigan
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