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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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