To: mph who wrote (52574 ) 10/30/2006 5:40:04 PM From: Alan Smithee Read Replies (1) | Respond to though I do believe the change was made in 1986, not 1996 Murphy The version of § 104(a)(2) in effect prior to 1996 had excluded from gross income monies received in compensation for “personal injuries or sickness,” which included both physical and nonphysical injuries such as emotional distress. Id. § 104(a)(2) (1995); see United States v. Burke, 504 U.S. 229, 235 n. 6, 112 S.Ct. 1867, 119 L.Ed.2d 34 (1992) (“ § 104(a)(2) in fact encompasses a broad range of physical and nonphysical injuries to personal interests”). In Commissioner v. Schleier, 515 U.S. 323, 115 S.Ct. 2159, 132 L.Ed.2d 294 (1995), the Supreme Court held that before a taxpayer may exclude compensatory damages from gross income pursuant to § 104(a)(2), he must first demonstrate that “the underlying cause of action giving rise to the recovery [was] ‘based upon tort or tort type rights.’ ” Id. at 337, 115 S.Ct. 2159. The taxpayer has the same burden under the statute as amended. See, e.g., Chamberlain v. United States, 401 F.3d 335, 341 (5th Cir.2005).I wonder where this issue will ultimately land.
