Joseph S. Rozpad and Kathleen M. Rozpad - Page 9

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          Commissioner, 99 F.3d at 26.  Therefore, the Kovacs line of                 
          authority controls.                                                         
               Petitioners contend that the holdings of Kovacs and its                
          progeny are flawed and should not be followed.  We are, however,            
          bound by this Court's prior decisions, unless subsequent events             
          warrant a change in position.  See Vasquez v. Hillery, 474 U.S.             
          254, 266 (1986); Hesselink v. Commissioner, 97 T.C. 94, 99                  
          (1991).  After considering the relevant post-Kovacs authorities             
          including Commissioner v. Schleier, 515 U.S. 323 (1995) (holding            
          that damages received under the Age Discrimination in Employment            
          Act of 1967, Pub. L. 90-202, 81 Stat. 602, are not excludable               
          pursuant to section 104(a)(2)) and O'Gilvie v. United States, 519           
          U.S. __, 117 S. Ct. 452 (1996) (holding that punitive damages are           
          not excludable pursuant to section 104(a)(2)), we reject                    
          petitioners' contention that departure from Kovacs and its                  
          progeny is warranted.  Accordingly, petitioners must include in             
          income the prejudgment interest portion of their respective                 
          3.  Section 212 Deduction                                                   
               Respondent determined that petitioners were entitled to an             
          itemized deduction for attorney's fees and costs relating to the            
          taxable portion (i.e., the portion relating to prejudgment                  
          interest) of their respective settlements.  Respondent's                    
          determination is presumed correct, and petitioners have the                 

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