Reference no: EM132863444

Question - Murray reported to the Environment Protection Agency that his employer was illegally dumping chemicals into a river. His charges were true, and Murray's employer was fined. In retaliation, Murray's employer fired him and made deliberate efforts to prevent Murray from obtaining other employment. Murray sued the employer, claiming that his reputation had been damaged. Murray won his lawsuit and received an award for "damages to his personal and professional reputation and for his mental suffering." Now he would like to know where the award is taxable. He argues that he was awarded damages as a recovery of his human capital and that a recovery of capital is not income. Is Murray's logic correct?