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(whether by suit or agreement and whether as lump sums or as
periodic payments) on account of personal injuries". The
regulations interpret this language as encompassing damages
received "through prosecution of a legal suit or action based
upon tort or tort type rights, or through a settlement agreement
entered into in lieu of such prosecution". Sec. 1.104-1(c),
Income Tax Regs. Statutory interest imposed on tort judgments,
however, must be included in gross income under section 61(a)(4),
even under circumstances in which the underlying damages are
excludable under section 104(a)(2). Brabson v. United States, 73
F.3d 1040, 1046-1047 (10th Cir. 1996); Robinson v. Commissioner,
102 T.C. 116, 126 (1994), affd. in part and revd. in part on
another ground 70 F.3d 34 (5th Cir. 1995); Kovacs v.
Commissioner, 100 T.C. 124, 128-130 (1993), affd. without
published opinion 25 F.3d 1048 (6th Cir. 1994).
Respondent's determination in the notice of deficiency that
the amount that petitioner received from Dupont constitutes
taxable income is presumptively correct, and petitioner has the
burden of proving otherwise. Rule 142(a); Welch v. Helvering,
290 U.S. 111 (1933). In order to satisfy his burden of proof,
petitioner must demonstrate that the underlying cause of action
giving rise to the damages that he received from Dupont is based
upon "tort or tort type rights", and that the damages were
received "on account of personal injuries or sickness".
Commissioner v. Schleier, 515 U.S. 323, 336-337 (1995).
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