The Internal Revenue Service on Friday issued final regulations removing the requirement that damages received from a legal suit, action or settlement for personal physical injury or sickness must be based on “tort or tort type rights” in order for the taxpayer to exclude them from income. They also clarify the excludability of damages for emotional distress. The final regulations adopt rules that were proposed in 2009, and they apply to damages received after Aug. 20, 1996. JournalofAccountancy.com (1/20)
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