- 23 -
amount of attention. Moreover, petitioner could not point to the
interference of the defendants as the source of his difficulty in
finding a new job. Finally, petitioner testified that he had
been seeing a psychotherapist for several years prior to his
firing as a result of the deterioration of his marriage and
problems with his children. Compare Noel v. Commissioner, T.C.
Memo. 1997-113 ("The evidence before the Court is that * * *
[payor's] actions caused petitioner to suffer emotional
distress") with Knuckles v. Commissioner, T.C. Memo. 1964-33
("The doctor did not make a determination that * * * [taxpayer's]
emotional condition was attributable to an act * * * on the part
of * * * [the payor]").
In light of the facts and circumstances, we conclude that
petitioner suffered no injury to his health that could be
attributed to the actions of the defendants, and we are not
persuaded that such injury was the basis of any payment to him by
Blount. See Knuckles v. Commissioner, 349 F.2d at 610. Rather,
while the settlement agreement ostensibly sought to settle all of
petitioner's claims, Blount's dominant reasons for payment were
to avoid a large punitive damages award as well as to avoid
losing on the contract claim arising out of the April 27 letter
at trial. Settlement proceeds recovered under either of these
claims are not excludable from income under section 104(a)(2).
Accordingly, we sustain respondent's determination in the notice
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