- 8 - (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 shouldPage: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
Last modified: May 25, 2011