The Tax Man Wins the Nobel Prize

5 Pages Posted: 16 Jan 2012 Last revised: 23 Feb 2012

Bridget J. Crawford

Pace University School of Law

Jonathan G. Blattmachr

Milbank, Tweed, Hadley & McCloy LLP

Date Written: December 12, 2011

Abstract

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.

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, K39

Suggested Citation

Crawford, Bridget J. and Blattmachr, Jonathan G., The Tax Man Wins the Nobel Prize (December 12, 2011). Tax Notes, Vol. 133, p. 1421, 2011. Available at SSRN: https://ssrn.com/abstract=1985690

Bridget J. Crawford (Contact Author)

Pace University School of Law ( email )

78 North Broadway
White Plains, NY 10603
United States

Jonathan G. Blattmachr

Milbank, Tweed, Hadley & McCloy LLP ( email )

1 Chase Manhattan Plaza
New York, NY 10005
United States
212-530-5066 (Phone)

Paper statistics

Downloads
68
Rank
276,826
Abstract Views
875