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PJC 313.2

D AMAGES

PJC 313.2

Instruction on Whether Compensatory Damages Are Subject to Income Taxes (Actions Filed on or after September 1, 2003)

You are instructed that any monetary recovery for [ list each element of eco nomic or noneconomic damages that is subject to taxation ] is subject to [ fed eral or state ] income taxes. Any recovery for [ list each element of economic or noneconomic damages that is not subject to taxation ] is not subject to [ federal or state ] income taxes. COMMENT When to use. PJC 313.2 should be submitted with the damages question in any action filed on or after September 1, 2003, in which a claimant seeks recovery for loss of earnings, loss of earning capacity, loss of contributions of a pecuniary value, or loss of inheritance. Whether an element of damages is taxable depends on the substantive tax law pertaining to each cause of action. Source of instruction. Section 18.091 of the Texas Civil Practice and Remedies Code, entitled “Proof of Certain Losses; Jury Instruction,” provides: (a) Notwithstanding any other law, if any claimant seeks recovery for loss of earnings, loss of earning capacity, loss of contributions of a pecuni ary value, or loss of inheritance, evidence to prove the loss must be pre sented in the form of a net loss after reduction for income tax payments or unpaid tax liability pursuant to any federal income tax law. (b) If any claimant seeks recovery for loss of earnings, loss of earning capacity, loss of contributions of a pecuniary value, or loss of inheritance, the court shall instruct the jury as to whether any recovery for compen satory damages sought by the claimant is subject to federal or state income taxes. Tex. Civ. Prac. & Rem. Code § 18.091.

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[PJC 313.3 and 313.4 are reserved for expansion.]

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