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Age discrimination damages are excludable and not subject to withholding in Ninth Circuit.

The Ninth Circuit Court of Appeals has joined two other circuit courts and the Tax Court in holding that damages awarded to claimants under the Age Discrimination in Employment Act are entirely excludable from gross income under IRC section 104(a)(4) (damages on account of personal injury), even though all or part of the award is based on lost wages. (See Pistillo, 6th Circ., 1991; Rickel, 3rd Circ., 1990; Downey, TC, 1991.) The ninth circuit, unlike the two other circuit courts, directly addressed the question of withholding. It said no withholding of federal or state payroll taxes is required on such damages.
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Author:Wagenbrenner, Anne
Publication:Journal of Accountancy
Date:Nov 1, 1991
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