Find a solution for problem 1

Rese Note: Solutions to the Research Problems can be prepared by using the Thomson THO Reuters Checkpoint Student Edition online tax research database, which accompa- Ch nies this textbook. Solutions can also be prepared by using research materials found in a typical tax library Research Problem 1. Murray reported to the Environmental 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 reputa- tion and for his mental suffering." Now he would like to know whether 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. Therefore, the Federal government does not have the power to tax the award. Research Problem 2. The employees of the city of Greenville must make mandatory contributions to the city's postretirement health benefit plan. The employees' contri- butions are placed in a trust and are used exclusively for the employees' benefits The employees believe that because they are required to make the contributions from their base salaries, the result should be the same as if the employer made the