WrongFulDeath Settlement

[Kurly]

Ok Gang

TaxPayers son was on a pro snowboard show. When the stageing area was wired for lighting etc. It was wired incorrectly and he was electrocuted. Parent sued the companies involved. The parent received a cash settlement of $300,000 via the court. Question? Taxable or non-taxable is it reported on line #21? The son was 22 years old.

Thanks all!

[RLymanC]

Wrongful Death

Payments for wrongful death usually seperate compensatory damages for physical and mental injury, as well as punitive damages for reckless, malicious, or reprehensible conduct. As a result, both claims may generate settlement amounts.

Any amounts that is classified as compensatory for the personal injuries are excludable from gross income under IRC section 104(a)(2).

The amounts determined to be non-compensatory, that is, punitive payments, are not excludable under
IRC section 104(a)(2).

[John of PA]

Included in Estate???

I would like to throw out this Question. In this person's estate, I have read where the wrongful death proceeds are taxable and included in the decedents estate (state inheritance tax and Federal 706 tax, if applicable). Perhaps this is only an issue in states that are decoupled from the Federal and do not have a large estate tax exemption.