Under current law, a business that is ordered to pay a punitive damages award can take a tax deduction for that payment, as a business expense. In recent years it has become an annual ritual for state and federal legislators to propose bills to eliminate such deductions.
In keeping with that trend, California senator Bob Wieckowski, D-Fremont, has introduced SB 66. The bill was approved by the Senate Governance and Finance Committee last week and is set for a hearing before the Senate Appropriations Committee on April 3.
We will keep an eye on this proposal, but so far we haven’t seen any reason to believe that the California legislature will approve this bill after rejecting similar proposals repeatedly in the past.
Related posts:
Sen. Leahy introduces another proposal to eliminate tax deductions for payments of punitive damages
Another proposed bill to eliminate federal tax deductions for payments of punitive damages
Bill to eliminate tax deductions for punitive damages appears to be dead
Assembly approves bill to prevent tax deduction of punitive damages; Senate not expected to act until August
Committee on Appropriations approves bill to prohibit deductions of punitive damages
Another proposal to prohibit California taxpayers from deducting punitive damages
Assembly rejects proposal to eliminate tax deductions for punitive damages
Proposed California bill would prevent tax deductions for punitive damages
Proposal to eliminate [federal] tax deduction for punitive damages still alive
Senate Adopts Proposal to Eliminate Tax Deduction for Punitive Damages
More from Prof. Markel on Tax Policy and Punitive Damages
Proposed [federal] legislation would eliminate tax deduction for punitive damages
Obama administration proposes to eliminate tax deduction for payment of punitive damages