Erin Tyler Brewster (J.D. 2012, SMU), Comment, When Have They Paid Enough? The Taxability of Compensation Payments Made to Wrongfully Incarcerated Individuals, 64 SMU L. Rev. 1405 (2011):

[T]his Comment has surveyed the federal and state compensation payments available to wrongfully imprisoned individuals. It has examined the current, unsettled federal income tax treatment of these payments (where available), ultimately concluding that, in the current environment, such payments are fully taxable. But given the price innocent individuals have paid, and the fundamental rights they have had stripped away, when have they paid enough? Rather than purely relying on the strict construction of exclusions from gross income and the Stadnyk definition of "physical," which combine to yield a less than ideal result, specific legislative action is needed. Congressional intervention is overdue and necessary in order to ensure that wrongfully incarcerated individuals stop paying, and start living, when they walk out of the prison doors – for the last time.