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This article will examine the reasoning of the Schleier decision and speculate as to how taxation of pre-1996 damages will likely apply in light of Schleier. First, the article will set forth a very brief history of the judicial and administrative constructions of the statutory exclusion, and explore tax policy justifications for providing an exclusion from gross income for certain damages. These latter two items (set forth in Parts II and III of this article) are areas that have been extensively addressed previously by several commentators, including the author of this article.' The reason for exploring tax policy issues is to permit the reader to judge the merits of the Schleier decision in light of the underlying policies for having an exclusion. The reader who is familiar with the historical and tax policy material, or simply isn't interested in it, might wish to skip over Parts II and III of this article. Part IV of this article discusses the Supreme Court's Burke decision and explains its inadequacy. A discussion of the Schleier decision and its significance begins at Part V of this article.