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For Federal income tax purposes, interest is generally
treated differently than the underlying obligation to which it
relates. Wheeler v. Commissioner, 58 T.C. 459, 461-462 (1972).
This is obvious in the typical debtor-creditor relationship in
which principal repayments do not constitute income to the
lender, but interest payments do. Different treatment, however,
also occurs in other contexts. For example, in Aames v.
Commissioner, supra, we held that the interest portion of a
payment received by the taxpayer in connection with a malpractice
claim against the taxpayer's attorney must be included in the
taxpayer's income even though the award itself was excluded from
income under section 104(a)(2). In accord is Kovacs v.
Commissioner, 100 T.C. 124, 129-130 (1993), affd. without
published opinion 25 F.3d 1048 (6th Cir. 1994), which held that
interest statutorily imposed upon a judgment awarded to the
taxpayer for personal injuries was not excluded from the
taxpayer's income under section 104(a)(2) even though the damages
were. Similarly, in Tiefenbrunn v. Commissioner, 74 T.C. 1566
(1980), we held that interest received by the taxpayer in
connection with a condemnation award must be included in the
taxpayer's income even though the gain that the taxpayer realized
as a result of the condemnation was subject to the nonrecognition
provisions of section 1033. Generally, any portion of a judgment
that compensates a taxpayer for the delay in receipt, or lost
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