Lance R. and Elaine C. LeFleur - Page 23

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            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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