In a certain civil case, plaintiff was awarded damages by the court in the sum of P20,000 representing profit he failed to realize on account of defendant’s failure to comply with his obligation to said plaintiff. Are those damages taxable against the plaintiff? a. No, because damages awarded are considered return of capital. b. No, because there is no sale transaction or exercise of profession in the awarding of damages. c. Yes, because the damages are not on account of injuries or sickness but for lost profit. d. Answer not given
In a certain civil case, plaintiff was awarded damages by the court in the sum of P20,000 representing profit he failed to realize on account of defendant’s failure to comply with his obligation to said plaintiff. Are those damages taxable against the plaintiff? a. No, because damages awarded are considered return of capital. b. No, because there is no sale transaction or exercise of profession in the awarding of damages. c. Yes, because the damages are not on account of injuries or sickness but for lost profit. d. Answer not given
Chapter5: Gross Income: Exclusions
Section: Chapter Questions
Problem 35P
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Question
In a certain civil case, plaintiff was awarded damages by the court in the sum of P20,000 representing profit he failed to realize on account of defendant’s failure to comply with his obligation to said plaintiff. Are those damages taxable against the plaintiff?
a. No, because damages awarded are considered return of capital.
b. No, because there is no sale transaction or exercise of profession in the awarding of damages.
c. Yes, because the damages are not on account of injuries or sickness but for lost profit.
d. Answer not given
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