Recent Case Expands ‘Sickness’ Exclusion

Abstract

The notion that conduct has a causal link to sickness – real sickness, not mere upset – is becoming more and more accepted. In her latest report to Congress in January 2010, U.S. Taxpayer Advocate Nina Olson made this a point. She has argued for parity between the taxation of emotional and physical injuries. She even asks Congress to amend Section 104 to make emotional distress recoveries tax-free.