IRS sharpening their knives....
I am not sure that a defamation aware is taxable. It is not “income”, like an insurance payout it is compensation for something lost, and the award represents the value that the jury appraised the loss. Any money going to the estates of the deceased will be taxed like any other inheritance. If the award was to the corporate entity Gibson Bakery, they owners would have to pay capital gains tax on the additional value when they sell.
“IRS sharpening their knives....”
Not sure, but I don’t think this type of income is taxable. Hope not.
Most damage awards, which is what liability payments are, are not taxable. Any amount specifically for lost income, might be.