David Gerald Lockmiller - Page 9

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          (1974).  If Congress sees fit to establish classes of persons who           
          shall or shall not benefit from a deduction or an exclusion,                
          there is no offense to the Constitution if all members of one               
          class are treated alike.  See Brushaber v. Union Pac. R.R.,                 
          supra; High Plains Agric. Credit Corp. v. Commissioner, supra.              
               Clearly, section 104(a)(2) does not interfere with the                 
          exercise of a fundamental right or employ a suspect                         
          classification.  Cf. Regan v. Taxation With Representation,                 
          supra.  Therefore, we need not apply a higher level of scrutiny             
          but must decide whether the requirement in section 104(a)(2)                
          regarding personal physical injuries or physical sickness bears a           
          rational relation to a legitimate governmental purpose.  See id.            
          at 547.  Stated otherwise, the presumption of constitutionality             
          that surrounds section 104(a)(2) may be overcome “only by the               
          most explicit demonstration that a classification is a hostile              
          and oppressive discrimination against particular persons and                
          classes.”  Madden v. Kentucky, 309 U.S. 83, 88 (1940).                      
               In amending section 104(a)(2), Congress was motivated by the           
          following:                                                                  
                    Damages received on a claim not involving a                       
               physical injury or physical sickness are generally to                  
               compensate the claimant for lost profits or lost wages                 
               that would otherwise be included in taxable income.                    
               The confusion as to the tax treatment of damages                       
               received in cases not involving physical injury or                     
               physical sickness has led to substantial litigation,                   
               including two Supreme court cases within the last four                 
               years.  The taxation of damages received in cases not                  
               involving a physical injury or physical sickness should                





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