Question
Suresh is a technician working with Melissas car repair centre. Due to a dangerous workplace accident, Suresh became seriously ill. Suresh received compensation of $131,000.
Suresh is a technician working with Melissa’s car repair centre. Due to a dangerous workplace accident, Suresh became seriously ill. Suresh received compensation of $131,000. The lump sum was divided into $57,000 loss of earnings, $43,000 loss of future earning capacity and $31,000 for pain and suffering.
Questions
Based on legal provisions and case law, advise Suresh, will any of these amounts be assessable income?
Furthermore, advise Suresh whether it would be better to accept a lesser sum of $110,000 without any agreed allocation of the funds between current and future earnings and pain and suffering.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Regarding the assessability of the compensation amounts as income it generally depends on the tax la...
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Federal Tax Research
Authors: Roby Sawyers, William Raabe, Gerald Whittenburg, Steven Gill
10th Edition
1285439392, 978-1305177697, 130517769X, 978-1305360181, 978-1285439396
