Should taxes be included in damage calculations?
The Tax Adviser › Vol. 36 Nbr. 10, October 2005
Linked as:
Extract
Should taxes be included in damage calculations?
In many cases, tax results can dramatically affect a litigation award or settlement, so that one or both parties may ask that it be adjusted accordingly. This article details how tax results can affect litigation awards and analyzes pertinent cases.
EXECUTIVE SUMMARY * Plaintiffs may seek a gross-up of an award, or additional damages, when all or part of the award is taxable * Defendants may request a deduction from damages when the damages are tax free or result in tax benefits (such as tax credits and depreciation). * Many cases support the notion that tax benefits should not be considered in computing economic-loss damages. ********** The use of jury instructions on tax matters in civil litigation is becoming widespread. Either plaintiffs or defendants may initiate them. Usually, jury instructions on taxes are simple. For example, there may be an admonition that in "awarding any damages, the jury should consider the additional taxes that the plaintiff will have to pay on receiving a lump sum, which would not have been payable had the defendant not breached the contract." Conversely, the jury ...See the full content of this document
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