Are the Apple ebook settlement credits taxable?

account-1048671_640There is an interesting discussion in progress on the Amazon customer forums. One of the post asked the interesting question “Given how much money that some people got – are ‘we’ (global we) going to have to report this money on our taxes? Since its a settlement and not a refund?”

While I only received a modest refund of $24 (I started boycotting books over $9.99 when agency pricing went into effect), many customers have reported receiving refunds in the hundreds of dollars. The biggest amount I saw posted on the forums claimed a $1888.73 refund.

The discussion references IRS Publication 525 (which seems to be about employee and business issues). The document does suggest that punitive damages may indeed be taxable.

One comment says:

This was only a quick search, but most of the links that came up under “Are settlements taxable” seem to think so. Also,

“Punitive Damages

Punitive damages are not excludable from gross income under IRC § 104(a)(2).

With the enactment of SBJPA, Public Law 104 -188, Section 1605(a) in 1996, Congress made it clear in IRC § 104(a)(2) that punitive damages are taxable, regardless of the nature of the underlying claim.

IRC § 104(a)(2) states gross income does not include —

“the amount of any damages (other than punitive) received (whether by suit or agreement and whether as lump sums or as periodic payments) on account of personal physical injuries or physical sickness.”

In the Ebook Settlement FAQ, Amazon notes that it did not disclose any personal customer information regarding this settlement. The discussion also notes that “Other Income” generally requires the issuance of a IRS Form 1099, which no one seems to have received.

The discussion seems pretty split with some saying it would be taxable and others saying not. So far, no attorneys or CPAs have stepped up to weigh in on the topic. I didn’t hear anything about any tax liabilities on the previous publisher portion of the settlement – of course, mine was only $2, so it was a non-issue, at least for me.

While it is a fascinating discussion, since I am neither a lawyer or a tax consultant, I have no idea where this ebook settlement actually falls in terms of tax liabilities. Any thoughts?

Daily Links and Deals: What Happens in an Internet Second?

daily_links_1Today, we live more and more of our lives in the digital world,  a world that moves at a totally different speed. What happens in an internet second? Also, a look at how cable companies overcharge, the Sony PS3 class action lawsuit settlement and free downloads of pioneering Pulp Horror magazine, Weird Tales. In deals, iCleave electronic accessories and a Bluetooth-enabled Instant Pot pressure cooker.

Daily Links for Thursday, June 23, 2016:

Download Issues of the Pioneering Pulp Horror & Fantasy Magazine, Weird Tales (1923-1954): Stories by Lovecraft, Bradbury & Many More (Open Culture) A collection of links to some fascinating material for horror fans.

What Happens in an Internet Second? (Motherboard) This is an interesting perspective on our digital lives. If so much happens in a single second, what does that say about our ability to keep up?

Cable company overcharges might be even worse than you realized (Ars Technica) And, it seems that they are even worse about refunding the overcharged amounts.

Sony Settles ‘Other OS’ PS3 Lawsuit (PC World) Stories like this are deeply disturbing. A corporation takes away one of the features of a device you own and you get $9 in damages? And you have to prove that you bought it for that functionality to get that? Meanwhile, the lawyers get millions.

Deals of the Day:

Amazon’s selection of Kindle Daily Deals includes The Complete Titanic Chronicles: A Night to Remember and The Night Lives On by Walter Lord for $3.99.

In Today’s Deals, Electronic accessories from iClever like the BoostCube 50W 6-Port Universal USB Desktop Charger. Also, the Instant Pot IP-Smart Bluetooth-Enabled Multifunctional Pressure Cooker.

The Barnes and Noble Nook Daily Find is Owl and the Japanese Circus by Kristi Charish for $1.99.The Romance Daily Find is Scrumptious by Amanda Usen for $1.99.

Kobo’s Daily Deal is All This Talk of Love A Novel by Christopher Castellani for $1.99. The Extra Daily Deal is Hidden12, Intelligence Required by Gail Parker for 99 cents.

iTunes’ Weekly Bestsellers Under $4 includes The Egypt Game by Zilpha Keatley Snyder for $2.99.

Google has a Topsellers Under $10 promotion.

(A note on Daily Deals: All prices current at the time of posting and subject to change. Most items marked Daily Deals are good for only the day posted.

Many large promotions have discount pricing that is set by the publisher. This usually means that titles can be found at a discount price across most platforms (with iTunes sometimes being the exception). If you have a favorite retailer you like to patronize, check the title on that website. There is a good chance that they will be matching the sale price.)

Daily Links are interesting links I discover as I go about my online day. The frequency and number of links posted depend upon the daily news. I also post other, different links of interest on Twitter, Facebook, and on the Google Plus eBook Evangelist Page.