Punitive Damages

About Punitive Damages:

compensation in excess of actual damages that is a form of punishment to the wrongdoer and of reparation to the injured. Monetary compensation awarded to an injured party as punishment to the defendant. Punitive damages are awarded only in rare instances of malicious and willful misconduct. They are taxable unless the damages arise from physical injury or sickness; such damages are excludable under Former IRC (check if this IRC provision is current here) § 104(a)(2).