Good news for sufferers of indignities and stress: all awards and settlements for on physical injuries might not be taxableTaxProfBlog While the appeals courts wrestle with nonphysical injuries, such as some worker compensation claimants have brought, the DC Circuit court of appeals has handed them a bone declaring that even nonphysical compensatory damages awards are not gross income. Murphy v. United States, No. 03cv02414 (D.C. Cir. 8/22/06), See § 104(a)(2) 26 USC