Paul L. Caron

Saturday, January 15, 2011

The Mind/Body Dualism of § 104(a)(2)

G. Christopher Wright (J.D. 2011, Catholic) has published Comment, Taxation of Personal Injury Awards: Addressing the Mind/Body Dualism That Plagues § 104(a)(2) of the Tax Code, 60 Cath. U. L. Rev. 211 (2010). Here is part of the Introduction:

This Comment provides courts with a definition of and a distinction between physical injury or sickness and emotional distress that comports with the language and intent of the statute in the continued absence of promulgated regulations interpreting § 104(a)(2). It will also help resolve the confusing question that [certain] taxpayers ... face: whether a personal injury award is compensation for a physical injury or sickness or for emotional distress. It concludes by analyzing current interpretations of § 104(a)(2) to determine whether brain-based illnesses, such as major chronic depression and  PTSD, are physical injuries or sicknesses or whether they are emotional distress.

Part I of this Comment discusses § 104(a)(2) prior to the 1996 amendment. It then analyzes the legislative record of the 1996 amendment and discusses how the IRS and courts have interpreted the amendment. Next, this Comment surveys existing legal and medical literature, as well as Congress's recent Mental Health Parity and Equity Addiction Act of 2008, to highlight legal, medical, and societal changes regarding the definition of physical injury or sickness. Part II analyzes several interpretations of § 104(a)(2)'s physical injury or sickness requirement. Finally, Part III proposes that courts adopt the definitions of “physical injury or sickness” and “emotional distress” provided by the Restatement (Third) of Torts, and asserts that brain-based injuries or sicknesses fit within the meaning of “physical” under § 104(a)(2), as well as its historical underpinnings.

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