Punitive Damages are tax-deductable.

A bill is up in Congress to change this.
See New York Times today online, July 1, 2010. "Damages Control, *Polsky and Markel.
"When corporations like Exxon, State Farm and Phillip Morris lose tort cases, juries occasionally award, in addition to compensation for the plaintiff's injuries, extensive punitive damages.
"But jurors are often unaware that companies are able to deduct those punitive damages in calculating their federal income taxes, saving them millions of dollars and undermining the original goal of the damages: to punish reprehensible corporate behavior."
Bp stands to take advantage if such damages are awarded.
"When a settlement is reached....... before a trial.....they aren't required to specify which parts of the settlement are punitive and which are compensatory;....... allows defendants to disguise the amounts that they would have paid as punitive damages as additional compensatory damages."
"And because the measure maintains the deductable status of compensatory damages, nearly all punitive damages will remain, as a practical, matter, deductible."
* Law professors at North Carolina and Florida State, resp.


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