Harry Neal Ball and Helen Patricia Ball - Page 3

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          total of $18,466.72).  At the time she executed the agreement,              
          Ms. Ball did not have any pending complaints against Revlon.                
               Petitioners filed in a timely manner their 1994 Federal                
          income tax return.  On the return, petitioners:  (1) Reported               
          wage income of $8,705.59; (2) attached a Form W-2 which reported            
          that Ms. Ball received $17,411.18 in "wages, tips, other                    
          compensation" from Revlon; and (3) attached copies of the                   
          separation and release agreement to support their position that             
          one-half (i.e., $8,705.59) of the $17,411.18 reported on the Form           
          W-2 was excludable from gross income pursuant to section                    
          104(a)(2).  On November 27, 1996, respondent issued petitioners a           
          notice of deficiency in which respondent determined that                    
          petitioners were not entitled to the claimed exclusion.                     
                                       OPINION                                        
               Section 104(a)(2) excludes from gross income "the amount of            
          any damages received (whether by suit or agreement and whether as           
          lump sums or as periodic payments) on account of personal                   
          injuries or sickness".  An award of damages may be excluded from            
          gross income only when it is received both:  (1) Through                    
          prosecution or settlement of an action based upon tort or tort              
          type rights and (2) on account of personal injuries or sickness.            
          Commissioner v. Schleier, 515 U.S. 323, 333-334 (1995).                     
               Petitioners did not present any evidence to establish that             
          the agreement settled an action based upon tort type rights. Ms.            





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