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specific tort or personal injury. Although petitioner is part
Native American, there is no indication that he was discriminated
against or that damages were paid under the settlement due to
that fact. Other than the distress caused by the unsettling
circumstances surrounding the company’s restructuring and the
elimination of petitioner’s position, there is no indication of a
personal injury. Nor is there a sufficient basis in the record
for allocating any portion of the settlement to such an injury.
The settlement agreement indicates that petitioner "wishes
to voluntarily terminate his employment with HOLNAM * * * [and
that] HOLNAM is willing to offer * * * [petitioner] certain
compensation and benefits as assistance, some of which * * *
[petitioner] would not be entitled to receive except by reason of
this Separation Agreement and Release." Further, the agreement
designates the payments in question as "severance pay" and the
company treated them as such, withholding income and employment
tax from the payments made to petitioner.
Under these circumstances, the payments received by
petitioner are not excludable from his gross income under section
104(a)(2).
To reflect the foregoing,
Decision will be entered
for respondent.
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Last modified: May 25, 2011