United States v. Burke, 504 U.S. 229, 8 (1992)

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236

UNITED STATES v. BURKE

Opinion of the Court

mation may recover not only for any actual pecuniary loss (e. g., loss of business or customers), but for "impairment of reputation and standing in the community, personal humiliaceptions, see Black's Law Dictionary 786 (6th ed. 1990); 1 S. Speiser, C. Krause, & A. Gans, American Law of Torts 6 (1983), nonphysical injuries to the individual, such as those affecting emotions, reputation, or character, as well. See, e. g., Rickel v. Commissioner, 900 F. 2d 655, 658 (CA3 1990) (noting that "it is judicially well-established that the meaning of 'personal injuries' in this context encompasses both nonphysical as well as physical injuries"); Roemer v. Commissioner, 716 F. 2d 693, 697 (CA9 1983) (noting that 104(a)(2) "says nothing about physical injuries," and that "[t]he ordinary meaning of a personal injury is not limited to a physical one"); Rev. Rule 85-98, 1985-2 Cum. Bull. 51 (holding that the 104(a)(2) exclusion "makes no distinction between physical or emotional injuries"); 1972-2 Cum. Bull. 3, acquiescing in Seay v. Commissioner, 58 T. C. 32, 40 (1972) (holding that damages received for "personal embarrassment," "mental strain," and injury to "personal reputation" may be excluded under 104(a)(2), and noting prior rulings regarding alienation of affections and defamation). See also B. Bittker & L. Lokken, Federal Taxation of Income, Estates and Gifts 13-11 (2d ed. 1989); Burke & Friel, Tax Treatment of Employment-Related Personal Injury Awards, 50 Mont. L. Rev. 13, 21 (1989).

Congress' 1989 amendment to 104(a)(2) provides further support for the notion that "personal injuries" includes physical as well as nonphysical injuries. Congress rejected a bill that would have limited the 104(a)(2) exclusion to cases involving "physical injury or physical sickness." See H. R. Rep. No. 101-247, pp. 1354-1355 (1989) (describing proposed 11641 of H. R. 3299, 101st Cong., 1st Sess. (1989)). At the same time, Congress amended 104(a) to allow the exclusion of punitive damages only in cases involving "physical injury or physical sickness." Pub. L. 101-239, 7641(a), 103 Stat. 2379, 26 U. S. C. 104(a) (1988 ed., Supp. I). The enactment of this limited amendment addressing only punitive damages shows that Congress assumed that other damages (i. e., compensatory) would be excluded in cases of both physical and nonphysical injury.

Notwithstanding Justice Scalia's contention in his separate opinion that the term "personal injuries" must be read as limited to "health"-related injuries, see post, at 244, the foregoing authorities establish that 104(a)(2) in fact encompasses a broad range of physical and nonphysical injuries to personal interests. Justice Scalia implicitly acknowledges that the plain meaning of the statutory phrase can support this well-established view. See post, at 243-244.

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