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While the incurring of expenses for medical or psychiatric
treatment would be relevant to show harm, they are not required
in order to prove that stress was endured. Petitioners'
testimony convinces us that their experiences produced serious
and prolonged stress. Proof of emotional distress is not limited
to the presentation of medical bills.9
Nor do we think the fact that the damages were distributed
in approximately proportionate shares of the defaulted milk
payments proves that they were not received for emotional
distress. Awards for personal injuries may be measured by lost
income and still be excluded under section 104(a)(2). "If a
taxpayer receives a damage award for a physical injury, which
almost by definition is personal, the entire award is excluded
from income even if all or a part of the recovery is determined
with reference to the income lost because of the injury."
Threlkeld v. Commissioner, 87 T.C. 1294, 1300 (1986), affd. 848
F.2d 81 (6th Cir. 1988); see also Banks v. United States, 81 F.3d
874 (9th Cir. 1996).
Furthermore, there were nearly 1,000 dairy farmer
plaintiffs. To have assessed the individualized emotional harm
suffered by each would have been exceedingly time consuming and
9 Although Souza suffered a stress-related heart attack
in 1988, and undoubtedly incurred medical expenses, as one of
1,000 plaintiffs he was not asked for, nor did he give, a
personal description of his medical situation to the lawyers for
either side.
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