1983 Church V. Commissioner's Case

Another basis to make Murray’s claim viable is the 1983 Church V Commissioner’s case. The court adopted a similar analysis to the Roemer decision. In the church, the taxpayers got $250000 compensatory damages and a punitive damage of $ 235000 in a defamation lawsuit. The court focused on the nature of the claim and identified that the award for compensation was as a result of humiliation, ridicule and total embarrassment. Those injuries were personal tort-type claims contrary to the physical injuries. The court acknowledged that personal injuries should not be limited to physical trauma alone, but should also consider the mental pain and sufferings that the plaintiff undergo.

Based on the 1996 amendment of Sec 104(a) 2, the court started to limit the types of the awards excluded from the taxable income. They added the requirement of physical injury or sickness to the personal damage account (Chirelstein & Zelenak, 2015). Also, the physical harm was to impair the ability of the plaintiff resulting from an employment

The damages awarded to him were as a result of the actual personal harm. Before the amendment of the Sec 104 (a) code, all the awards arising from the tort of defamation were exempted from tax. By critically analyzing the case, Murray could incur a personal physical damage in long-run if he was not to secure another job position. The consideration validates that the payments offered to him by his former employees should be tax-free. The future of his employment is uncertain. Despite the fact that emotional damages are not considered as the physical injury or sickness, Murray’s losses can directly attribute to a physical illness or injury in future. He may fall sick due to stress for lack of a job. It may make him unable to obtain a daily bread. Also, his freedom to socialize with the other people was