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without published opinion 676 F.2d 682 (1st Cir. 1982). In order
to exclude a settlement or a recovery, a taxpayer mustdemonstrate
(1) that the underlying cause of action giving rise to the
settlement or recovery is based upon tort or tort-type rights and
(2) that the damages were received on account ofpersonal injuries
or sickness. Commissioner v. Schleier, 515 U.S. at ,115 S. Ct.
at 2167.
Respondent argues that (1) there is no underlying cause of
action giving rise to a settlement or recovery; i.e., the
ITOpayment or allowance does not constitute "damages", and (2)
IBMdid not pay petitioner the ITO allowance on account of
personal injury. Petitioner contends that because the ITO payment
was in exchange for the Release which included tort claims and
was intended to avoid litigation, it was a tort
settlement.Petitioner also contends that the ITO allowance was
paid on account of personal injury, since the loss of a job gives
rise tostress-related medical expenses, lost wages, and pain and
suffering, just as the typical personal injury described in
Commissioner v. Schleier, 515 U.S. at , 115 S. Ct. at 2163-2164,
does. Petitioner states that it took him 1-1/2 years tosecure
full-time employment. At the time petitioner signed the Release,
he had made noclaims against IBM. The Release was not the result
of settlement negotiations between petitioner and IBM. Indeed,
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