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1605(d)(2), 110 Stat. 1839. Accordingly, the amended version of
section 104(a)(2) does not apply to this case. Before Congress
amended section 104(a)(2) in 1996 to limit the exclusion to
amounts received for physical personal injuries, the U.S. Supreme
Court interpreted section 104(a)(2) to encompass harms both
tangible and intangible, both physical and nonphysical.
Commissioner v. Schleier, supra at 329 n.4; see also United
States v. Burke, supra at 235-236; Roemer v. Commissioner, 716
F.2d 693, 697 (9th Cir. 1983), revg. 79 T.C. 398 (1982); Bland v.
Commissioner, T.C. Memo. 2000-98. Intangible harms recognized as
within the scope of the statute include those affecting emotions,
reputation, or character. United States v. Burke, supra at 235
n.6. Further, the intangible harms of discrimination, e.g.,
emotional distress, can constitute personal injuries, and
compensation for such harms may be excludable under section
104(a)(2). Commissioner v. Schleier, supra at 332 n.6. The
parties stipulated that Mr. Forste “became extremely distressed
at being pressured to fly; he was terrified by the thought of
flying” and “started having nightmares again and developed
headaches which required that he take Tylenol with codeine.” Mr.
Forste contemplated suicide as a result of DHS’s actions. Mr.
Forste’s claims of emotional distress qualify as claims for
personal injuries for purposes of this case.
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