Tax Structuring

April, 2011 (Trusts & Estates Magazine)

In many personal injury cases, and especially those involving large sums of money or actions brought by personal injury victims' beneficiaries, both income tax and estate tax can significantly change the net value of an award or settlement. Some may be surprised to learn that even personal physical injury damages can result in tax liability as a result of the estate tax. This article explains how the income tax and estate tax impact awards and settlements, including structured settlements, and includes a reference table for practitioners.

September, 2010 (Practical Tax Strategies); November, 2010 (North Carolina Lawyers Weekly)

Unlike damages for personal physical injuries, damages received for non-physical injuries such as emotional distress are typically taxable. However, where medical care costs have been or will be incurred by a plaintiff with an emotional distress claim, proper planning under Section 104 can improve both plaintiff's and defendant's post-settlement position. This article discusses the use of a structured settlement as one way to reduce tax liability.

August, 2010 (Practical Tax Strategies); November, 2010 (North Carolina Lawyers Weekly)

Benefiting from Section 104's provision for tax-free personal injury damages and Section 213's medical expense deductions requires careful planning. This article describes how to do so for previously deducted, expected, or already incurred but not deducted medical expenses resulting from tortiously caused personal injuries.

April, 2010 (Tax Notes)

The structured settlement tax exclusion is meant to provide an incentive for personal injury plaintiffs not to dissipate their recoveries. This article recommends that a uniform tax credit be used instead of an exclusion to ensure that the incentive influences those most likely to dissipate.

April, 2010 (NYU Journal of Legislation & Public Policy)

In 1982 Congress legislated a tax exclusion incentivizing the use of structured settlements. Since then the structured settlement has become a common conclusion for personal injury claims. This Article tracks the history and evolution of the structured settlement industry, including the beginning and continuation of the factoring industry. The history, specifically the evolving treatment of the economic benefit and constructive receipt doctrines as applied to structured settlements, informs the debate over whether damages paid to single-claimant qualified settlement funds should or should not be eligible for the structured settlement tax exclusion.The Article concludes that eligibility is consistent with structured settlement history, and in the interest of public policy.

March, 2010 (North Carolina Lawyers Weekly)

Since 1996, emotional distress damages, unlike damages paid on account of phyiscal injuries and physical sickness, have been generally taxable. Plaintiff attorneys and structured settlement industry members lobbied Treasury at a February 23, 2010 Treasury hearing to allow some damages to be received tax-free even without directly satisfying the "physical" requirement. This Article discusses the hearing, and how a recommendation by the National Taxpayer Advocate may make it possible for legislation to take us back to pre-1996 days.

December, 2009 (North Carolina Lawyers Weekly)

Whether single-claimant qualified settlement funds can take advantage of the structured settlement exclusion has been debated for some time. The Treasury has had the issue on its "to do list" since 2004, and in 2008 it was reported that the decision was near at hand. As of November, 2009, however, the issue is no longer on the priority guidance plan. How did we get here? And, what does this mean for the future?

December, 2009 (NYU Journal of Law & Business)

The structured settlement tax exclusion incentivizes personal injury claimants to agree to periodic payments as opposed to a lump sum amount, in the hope of preventing premature dissipation.The anecdotal evidence suggests that such dissipation is frequent. Statistical evidence is also commonly cited. This Note examines the available empirical data, finding the evidence to be inconclusive, and that those citing dissipation data are often mistaken. 

Interviews on Personal Injury Taxation

1. On Lump Sum Personal Injury Settlement Dissipation
   
2. On Factoring, Structured Settlements, and Single-Claimant Qualified Settlement Funds
   

Series on February 23, 2010 Treasury Hearing on Proposed 104(a)(2) Regulations

1. Part 1: Treasury Hearing on IRC 104 Regulations
2. Part 2: A Common Cause at the Treasury Regulation Hearing
3. Part 3: Voices at the 104(a)(2) Treasury Hearing

Presidential Policy Rhetoric: A Case Study of President George W. Bush's Social Security Reform Campaign

2010 (Lambert Academic Publishing)

The book takes on a holistic analysis of President George W. Bush's 2005 Social Security reform campaign. His effort represents a particularly useful example of a concerted effort by a president to persuade the nation, partly because he led on the issue so publicly. In the end, the President did not succeed. Making use of classical and modern understandings of rhetoric, psychology, and political science, the book looks at the President's language, likely strategy, and evaluates his arguments. Few of the findings are likely unique to President Bush, speaking more generally to the practice of modern American political persuasion. Building on past work, the book develops several strategies of rhetorical campaign analysis, many of which unveil a political strategy that today's media and public should recognize more quickly: the preference and use of emotive over logical appeals.

Factoring in a World of Taxation

• National Association of Settlement Purchasers Annual Conference in Las Vegas, 2010
• The presentation proceeds through common transactions in a structured settlement's life cycle drawing out principles of taxation that may be applied for those transactions without clear precedents. There is only one private letter ruling directly focused on factoring and the principles drawn from analogous transactions may be the next best resource for taxpayers.

Justifying the Structured Settlement Tax Subsidy and Expanding Its Application

• Society of Settlement Planners Conference in Washington, D.C., 2010
• The presentation looks back at the purpose of the structured settlement tax subsidy created in 1982. A central question addressed is who the subsidy is helping and whether it could better target Congress' intended beneficiaries. 

Can One Reconcile Factoring and the Structured Settlement Tax Subsidy?

• National Association of Settlement Purchasers Annual Conference in Las Vegas, 2009
• The presentation focuses on the ability to factor structured settlements, attempting to reconcile the ability to factor with the purpose of the public policy incentive to structure personal injury settlements.