The Development and Solution of a Tax-Adjusted Model for Personal Injury Awards
The inclusion of an income tax analysis in the calculation of the present value of loss of earning capacity in wrongful death or personal injury cases has been encouraged by recent judicial decisions. A detailed model is presented that is capable of dealing with the variable tax rates involved. This...
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| Veröffentlicht in: | The Journal of risk and insurance 1984-03, Vol.51 (1), p.138-142 |
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| container_end_page | 142 |
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| container_issue | 1 |
| container_start_page | 138 |
| container_title | The Journal of risk and insurance |
| container_volume | 51 |
| creator | Brady, Dennis P. Brookshire, Michael L. Cobb, William E. |
| description | The inclusion of an income tax analysis in the calculation of the present value of loss of earning capacity in wrongful death or personal injury cases has been encouraged by recent judicial decisions. A detailed model is presented that is capable of dealing with the variable tax rates involved. This tax-adjusted model, developed to estimate lost earnings, is far more complex than the no-tax model, partly because of the progressive nature of the income tax and the need to consider the tax on the interest generated by an award. The tax-adjusted lump sum equivalent must earn enough aftertax interest to allow for payout of the aftertax wages. This lump sum should be fully consumed after the final payout of wages. A procedure is detailed that generates all of the unknown elements needed to find the tax-adjusted lump sum equivalent award. |
| doi_str_mv | 10.2307/252808 |
| format | Article |
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A detailed model is presented that is capable of dealing with the variable tax rates involved. This tax-adjusted model, developed to estimate lost earnings, is far more complex than the no-tax model, partly because of the progressive nature of the income tax and the need to consider the tax on the interest generated by an award. The tax-adjusted lump sum equivalent must earn enough aftertax interest to allow for payout of the aftertax wages. This lump sum should be fully consumed after the final payout of wages. 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A detailed model is presented that is capable of dealing with the variable tax rates involved. This tax-adjusted model, developed to estimate lost earnings, is far more complex than the no-tax model, partly because of the progressive nature of the income tax and the need to consider the tax on the interest generated by an award. The tax-adjusted lump sum equivalent must earn enough aftertax interest to allow for payout of the aftertax wages. This lump sum should be fully consumed after the final payout of wages. A procedure is detailed that generates all of the unknown elements needed to find the tax-adjusted lump sum equivalent award.</description><subject>Annual wages</subject><subject>Awards</subject><subject>Communications and Notes</subject><subject>Earnings</subject><subject>Estimated taxes</subject><subject>Income taxes</subject><subject>Insurance claims</subject><subject>Lump sum</subject><subject>Lump sum payments</subject><subject>Lump sum taxation</subject><subject>Mathematical procedures</subject><subject>Payments</subject><subject>Personal injury damages</subject><subject>Present value</subject><subject>State court decisions</subject><subject>Studies</subject><subject>Supreme Court decisions</subject><subject>Tax rates</subject><subject>Wages</subject><subject>Wrongful death</subject><issn>0022-4367</issn><issn>1539-6975</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>1984</creationdate><recordtype>article</recordtype><recordid>eNp10FFLwzAUBeAgCs6pvyEo-Fa9SZre9rHMqYPJBOdzyZpbXOmambTq_r2V-urTefk4HA5jlwJupQK8k1qmkB6xidAqi5IM9TGbAEgZxSrBU3YWQg0ACGk2Yav1O_F7-qTG7XfUdty0lr-6pu-2ruWu4oavzXeU27oPHVn-7Cw1vHKev5APrjUNX7R17w88_zLehnN2Upkm0MVfTtnbw3w9e4qWq8fFLF9GpQTZRVJkCkppEU1sFAqlMTVGatwA2bjaWE0mQaG1TjQkmCIgKop1uVGaRCbUlF2NvXvvPnoKXVG73g9zQiFlksVDIwzoZkSldyF4qoq93-6MPxQCit-vivGrAV6PsA6d8_-pHwRnY7c</recordid><startdate>19840301</startdate><enddate>19840301</enddate><creator>Brady, Dennis P.</creator><creator>Brookshire, Michael L.</creator><creator>Cobb, William E.</creator><general>American Risk and Insurance Association</general><general>Blackwell Publishing Ltd</general><scope>AAYXX</scope><scope>CITATION</scope><scope>K9.</scope></search><sort><creationdate>19840301</creationdate><title>The Development and Solution of a Tax-Adjusted Model for Personal Injury Awards</title><author>Brady, Dennis P. ; Brookshire, Michael L. ; Cobb, William E.</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c202t-21930c2d77a4a3713578aa257b0ed4fbd5ea67155565067870773e45cb35e1913</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>1984</creationdate><topic>Annual wages</topic><topic>Awards</topic><topic>Communications and Notes</topic><topic>Earnings</topic><topic>Estimated taxes</topic><topic>Income taxes</topic><topic>Insurance claims</topic><topic>Lump sum</topic><topic>Lump sum payments</topic><topic>Lump sum taxation</topic><topic>Mathematical procedures</topic><topic>Payments</topic><topic>Personal injury damages</topic><topic>Present value</topic><topic>State court decisions</topic><topic>Studies</topic><topic>Supreme Court decisions</topic><topic>Tax rates</topic><topic>Wages</topic><topic>Wrongful death</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Brady, Dennis P.</creatorcontrib><creatorcontrib>Brookshire, Michael L.</creatorcontrib><creatorcontrib>Cobb, William E.</creatorcontrib><collection>CrossRef</collection><collection>ProQuest Health & Medical Complete (Alumni)</collection><jtitle>The Journal of risk and insurance</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Brady, Dennis P.</au><au>Brookshire, Michael L.</au><au>Cobb, William E.</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>The Development and Solution of a Tax-Adjusted Model for Personal Injury Awards</atitle><jtitle>The Journal of risk and insurance</jtitle><date>1984-03-01</date><risdate>1984</risdate><volume>51</volume><issue>1</issue><spage>138</spage><epage>142</epage><pages>138-142</pages><issn>0022-4367</issn><eissn>1539-6975</eissn><abstract>The inclusion of an income tax analysis in the calculation of the present value of loss of earning capacity in wrongful death or personal injury cases has been encouraged by recent judicial decisions. A detailed model is presented that is capable of dealing with the variable tax rates involved. This tax-adjusted model, developed to estimate lost earnings, is far more complex than the no-tax model, partly because of the progressive nature of the income tax and the need to consider the tax on the interest generated by an award. The tax-adjusted lump sum equivalent must earn enough aftertax interest to allow for payout of the aftertax wages. This lump sum should be fully consumed after the final payout of wages. A procedure is detailed that generates all of the unknown elements needed to find the tax-adjusted lump sum equivalent award.</abstract><cop>Malvern</cop><pub>American Risk and Insurance Association</pub><doi>10.2307/252808</doi><tpages>5</tpages></addata></record> |
| fulltext | fulltext |
| identifier | ISSN: 0022-4367 |
| ispartof | The Journal of risk and insurance, 1984-03, Vol.51 (1), p.138-142 |
| issn | 0022-4367 1539-6975 |
| language | eng |
| recordid | cdi_proquest_journals_226941350 |
| source | EBSCO Business Source Complete; JSTOR |
| subjects | Annual wages Awards Communications and Notes Earnings Estimated taxes Income taxes Insurance claims Lump sum Lump sum payments Lump sum taxation Mathematical procedures Payments Personal injury damages Present value State court decisions Studies Supreme Court decisions Tax rates Wages Wrongful death |
| title | The Development and Solution of a Tax-Adjusted Model for Personal Injury Awards |
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