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Emotional damages are not taxable, D.C. Circuit rules.

Publication: Trial
Publication Date: 01-NOV-06
Format: Online
Delivery: Immediate Online Access

Article Excerpt
A whistleblower "made whole" by her former employer does not owe taxes on her recovery for emotional distress and loss of reputation, the District of Columbia Circuit has ruled.

"Compensation for a nonphysical personal injury is not income under the Sixteenth Amendment if, as here, it is unrelated to lost wages or earnings," Justice Douglas Ginsburg wrote for the unanimous court. (Murphy v. Internal Revenue Serv., 2006 WL 2411372 (D.C. Cir. Aug. 22, 2006).)

After Marrita Leveille (now Murphy) reported environmental...

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