May 12, 2009

Obama Administration Proposes To Eliminate Tax Deduction for Payment of Punitive Damages

As reported in BusinessInsurance.com, the Obama administration made a proposal yesterday that would prevent taxpayers from deducting punitive damage payments as business expenses. The proposal is included in the administration's 2010 budget. If approved by Congress, the new rule would apply to punitive damages paid after December 31, 2010. The administration said the "deductibility of punitive damage payments undermines the role of such damages in discouraging and penalizing certain undesirable actions or activities."