SB 66: Damages: income taxes deduction.

The Personal Income Tax Law and the Corporation Tax Law allow various deductions in computing the income that is subject to the taxes imposed by those laws. Both laws allow a deduction for ordinary and necessary business expenses, including a deduction for amounts paid or incurred for specified types of punitive damages.

This bill, for taxable years beginning on or after January 1, 2018, would disallow, under both laws, a deduction for amounts paid or incurred for punitive damages, as provided. bill would, in an action in which those damages are sought, require the court to inform the trier of fact, prior to deliberation, that a tax deduction on these damages is allowed as ordinary and necessary business.