- 10 -
We have considered all of petitioners' remaining arguments
and find them to be without merit.6
As we have concluded that petitioner's claim was not based
upon tort or tort type rights, we need not address the second
requirement of Commissioner v. Schleier, supra, regarding the
nature of damages. Accordingly, we conclude that petitioners are
not entitled to exclude from gross income any part of the State
Farm payment pursuant to section 104(a)(2).7
To reflect the foregoing,
Decision will be entered
under Rule 155.
6 Petitioners argue, inter alia, that, pursuant to sec. 3509,
respondent should look to State Farm for the tax liability on the
State Farm payment. Petitioner, however, has never been an
employee or trainee of State Farm. Accordingly, as to
petitioner, State Farm has no duty to withhold taxes pursuant to
sec. 3509.
7 Our opinion herein is consistent with prior decisions of
this Court, which similarly held that settlement proceeds
received pursuant to the Kraszewski litigation were not
excludable from gross income under sec. 104(a)(2). See Clark v.
Commissioner, T.C. Memo. 1997-156; Martinez v. Commissioner, T.C.
Memo. 1997-126; Fredrickson v. Commissioner, T.C. Memo. 1997-125.
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