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the claim was part of the negotiation, and an agreement allocated
proceeds to such claim. Riley believed that Kenneth had suffered
personal injury, Franklin and the sons’ lawyer testified that
they knew of the personal injury claims and that those claims
were discussed during the course of the litigation, and the
settlement indicates that those claims were part of the
negotiation. Cf. Commissioner v. Schleier, supra (finding that
the taxpayer asserted, and the parties negotiated, an age
discrimination in employment, but not a personal injury, claim);
United States v. Burke, supra (finding that the taxpayer
asserted, and the parties negotiated, a sex discrimination in
employment, but not a personal injury, claim).
Accordingly, the payments were received on account of
personal injuries and are excludable pursuant to section
104(a)(2). Consequently, section 6662(a) is not applicable.
Contentions not addressed are moot, irrelevant, or without
merit.
To reflect the foregoing,
Decision will be entered
for petitioners.
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Last modified: May 25, 2011