The Tax Man Wins the Nobel Prize
Bridget J. Crawford
Pace University School of Law
Jonathan G. Blattmachr
Milbank, Tweed, Hadley & McCloy LLP
December 12, 2011
Tax Notes, Vol. 133, p. 1421, 2011
In this article, the authors review the income tax treatment of prizes and awards in the context of Dr. Ralph Steinman who died in 2011 before being named a Nobel Laureate in Medicine. The Nobel Committee has announced that it intends to pay the prize money to Dr. Steinman’s estate. Should this amount be treated as income in respect of a decedent? IRD is one of those terms that is not defined in the Internal Revenue Code, and has no accepted definition. Generally speaking, however, IRD typically is understood as income in an “accrual” sense. The classic case of IRD arises if a taxpayer who owns a bond dies before accrued interest is paid. In that sense, the Nobel Prize appears to be unlike classic IRD. Dr. Steinman had no right to the prize at the time of his death. The winner had not been announced yet. Nevertheless, the Service has a strong argument that amounts received by Dr. Steinman’s heirs should be treated as IRD because of the voluntary nature of the payment by the Nobel Committee to Dr. Steinman's heirs.
Number of Pages in PDF File: 5
Keywords: prize, award, income, Nobel, IRD, income in respect of a decedent, estate income, income taxation of estate, tax, Steinman, medicine, voluntary payment, Internal Revenue Service, IRS
JEL Classification: K1, K34, K39Accepted Paper Series
Date posted: January 16, 2012 ; Last revised: February 23, 2012
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