On taxation of emotional distress damages

Here is a cornucopia of links regarding the rehearing of the D.C. Circuit's decision in Murphy v. IRS, where a panel held that section 104(a)(2) of the Internal Revenue Code "is unconstitutional under the 16th Amendment as applied to a recovery for a non-physical personal injury unrelated to lost wages or earnings."

You know it's a big tax case when I've read it myself. I've had a few tense arguments with opposing counsel at the end of a hard-fought case when there is a settlement (or worse) and then somebody starts talking about taxes.