Sunday, February 19, 2012

POW Payments

INFO 2011-0092

UIL No. 104.03-00


December 01, 2011

Number: 2011-0092



Release Date: 12/30/2011

UIL: 104.03-00

The Honorable Adam Kinzinger

Member, U.S. House of Representatives

2701 Black Road, Suite 201

Joliet, IL 60435

Attention: [Redacted Text]

Dear Congressman Kinzinger:

I am responding to your letter dated October 28, 2011, on behalf of a constituent who is a former prisoner of war of the 1991 Gulf War. Your constituent, along with other prisoners of war, sued Iraq and ultimately received a payment in settlement of the suit. The constituent asked whether the payment is includible in gross income.

Gross income includes all income from whatever source derived, except as otherwise provided by law ( section 61 of the Internal Revenue Code (Code)). However, section 104(a)(2) generally excludes from gross income the amount of any damages received(whether by suit or agreement) on account of personal physical injuries or physical sickness.

We do not know the terms of the settlement agreement involving your constituent. The underlying lawsuit, however, indicates that the prisoners of war were physically tortured, severely beaten, starved, and deprived of medical care. Thus, it would appear that any payment that your constituent received on account of such treatment would be excluded from gross income under section 104(a)(2), even though the United States made the payment rather than Iraq.

I hope that this information is helpful. If you have any questions, please contact [Redacted Text] or me at [Redacted Text].


Michael J. Montemurro

Chief, Branch 4

Office of Associate Chief Counsel

(Income Tax & Accounting)

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