Daily Tax Update - April 21, 2008

SUPREME COURT DECLINES TO HEAR APPEAL OF ‘MURPHY V. IRS’:  Today, the US Supreme Court declined to hear an appeal of Murphy v. IRS (Murphy v. IRS, US, No. 07-802, cert. denied 4/21/08). In August 1996, the US Court of Appeals for the District of Columbia Circuit found Section 104(a)(2) to be unconstitutional as applied to an individual's award of damages for emotional distress and injury to professional reputation. In December 1996, the court issued an order vacating that judgment and held oral arguments in April 2007. The DC Circuit Court’s second Murphy decision, issued in July 2007, reversed its initial finding and held that compensatory damages awarded for emotional distress and injury to professional reputation were taxable.

PRESIDENT SIGNS ONE-WEEK FARM  BILL EXTENSION:  President Bush gave the House and Senate farm bill conferees until April 25 to resolve their differences regarding the offsets and spending provisions of the farm bill. The basic farm bill agreement between the House and the Senate is to increase spending by $10 billion over 10 years using offsets provided by the Senate Finance Committee and the House Ways and Means Committee and shift about another $10 billion within the $597 billion baseline to make changes in farm bill priorities. In addition, the Senate bill included a $2.5 billion tax package.

  • Late last week, House Agriculture Committee Chairman Peterson said, “From what I understand of what's been offered here, in the view of some [in the House], is that this is really not a $2.4 billion tax package, it's actually a $10 billion tax package.”

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