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supports the proposition that back wages for what might be
regarded as a tort-like injury, e.g. discrimination on account of
age, race, disability, or sex, are taxable unless it can be shown
that (a) the discrimination caused physical or psychological
injury, and (b) the loss of pay was due to a physical or
psychological injury, not just the discriminatory action of the
employer.4
Schleier became the law of the land applicable to all
pending cases. When the U.S. Supreme Court announces a rule of
law and applies it to the litigants in the case announcing the
rule, that rule applies retroactively to all other pending cases
unless barred by the statute of limitations or res judicata. See
Harper v. Virginia Dept. of Taxation, 509 U.S. 86, 97 (1993);
James B. Beam Distilling Co. v. Georgia, 501 U.S. 529, 540-541,
544 (1991). Consistently with this view, the Tax Court has
applied Schleier to taxable years antedating the Supreme Court’s
opinion therein. See, e.g., Bagley v. Commissioner, 105 T.C. 396
(1995), affd. 121 F.3d 393 (8th Cir. 1997); Green v.
Commissioner, T.C. Memo. 1998-274; Goeden v. Commissioner, T.C.
Memo. 1998-18; Wise v. Commissioner, T.C. Memo. 1998-4; Kroposki
4 It is noteworthy that the Supreme Court in Schleier v.
Commissioner, 515 U.S. 323, 336 n. 8 (1995) cast doubt on the
Commissioner’s reading of United States v. Burke, supra, in Rev.
Rul. 93-88, 1993-2 C.B. 61. In Notice 95-45, 1995-2 C.B. 330,
the Commissioner suspended Rev. Rul. 93-88; in Rev. Rul. 96-65,
1996-2 C.B. 6, the Commissioner obsoleted Rev. Rul. 93-88.
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