TaxProfBlog – Lesson From The Tax Court: Emotional Distress Is Not Physical Illness (September 27, 2021)

Bryan Camp has published an article on the TaxProf Blog, titled “Lesson From The Tax Court: Emotional Distress Is Not Physical Illness”, which discusses how damages for severe emotional distress are not excludable unless properly linked to a physical injury in Rebecca A. Tressler v. Commissioner, T.C. Summ. Op. 2021-33 (Sept. 13, 2021). The article begins as follows:

My dad practiced medicine for some 40 years as both a surgeon and family practitioner.  He raised us to believe that someone who did not have objectively detectable causes for their physical symptoms was not really ill: it was “all in their head.”  The medical term for that idea is “psychosomatic disorder.” 

The Tax Code makes the same distinction.  Section 104(a)(2) permits taxpayers to exclude damages recovered for objectively detectible physical injuries or physical sickness.   But they may not exclude damages received for a sickness that is simply “all in their head.”  The legal term for that idea is “emotional distress.” 

Click here to see the full article: “Lesson From The Tax Court: Emotional Distress Is Not Physical Illness”

Posted by Anthony Tran, Associate Editor, Wealth Strategies Journal

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