Lance R. and Elaine C. LeFleur - Page 3

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            husband, and the term "petitioner" will be used henceforth to                             
            refer to Lance R. LeFleur).                                                               
                  Unless otherwise indicated, all section references are to                           
            the Internal Revenue Code in effect for the year at issue.  All                           
            Rule references are to the Tax Court Rules of Practice and                                
            Procedure.                                                                                
                  After concessions, the issues remaining for decision are as                         
            follows:                                                                                  
                  (1)  Whether $800,000 of the $1 million lump sum paid to                            
            petitioner in 1991 in settlement of a suit against his former                             
            employer is excludable from petitioners' gross income under                               
            section 104(a)(2) as damages received on account of personal                              
            injuries.  We hold that it is not.                                                        
                  (2)  Whether petitioners may deduct legal fees and costs                            
            incurred in bringing the suit as Schedule C expenses to the                               
            extent that such fees are allocable to taxable income.  We hold                           
            that they may not.                                                                        
                  Some of the facts are stipulated and are found accordingly.                         
            The stipulation of facts and the attached exhibits are                                    
            incorporated herein by this reference.  Petitioners resided in                            
            Montgomery, Alabama, at the time they filed their petition in                             
            this case.                                                                                
                                         FINDINGS OF FACT                                             
                  In 1984, petitioner was hired as vice president for Blount                          
            Energy Resource Corp. (BERC), a wholly owned subsidiary of                                




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