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Splitting hairs at the IRS over taxing compensation for false convictions

A tax lawyer warns that the IRS ruling mentioned last week may not completely end the requirement that wrongfully convicted people pay taxes on state compensation. Robert Wood argues that "this IRS ruling says only that a victim of wrongful imprisonment who 'suffered physical injuries and physical sickness while incarcerated' can exclude his recovery from taxes and can structure it just like other physical injury victims.  We already knew that." He continues in a blog post at Forbes:I commend the IRS for saying what it did say in IRS Chief Counsel Advice 201045023.  But that isn?t the issue.  The IRS issued a series of rulings in the 1950s and 1960s, involving prisoners of war, civilian internees and holocaust survivors...continue to full post

Full post as published by Grits for Breakfast on November 22, 2010 (boomark / email).