Opinion summary
Etalia.ai summary of the majority opinion
The case involved the taxation of punitive damages awarded to Kelly M. O'Gilvie and his brother after their father died due to negligence by a pharmaceutical company. The main issue was whether these punitive damages should be excluded from gross income under Section 104(a)(2) of the Internal Revenue Code, which excludes from taxable income any damages received on account of personal injuries or sickness. The Supreme Court held that punitive damages are not excludable because they do not compensate for personal injury but rather serve as punishment for wrongdoing and deterrence against future misconduct. Therefore, such awards must be included in gross income and are subject to federal taxation.
Opinion written by Justice Breyer
Decided 10 Dec 1996 · Official report