William Roger and Joan Ann Thorpe - Page 5

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          Petitioners invoked the Court's jurisdiction by filing a timely             
          petition for redetermination.3                                              
          On August 13, 1996, petitioners filed an amended return for                 
          1992 in which they reduced the amount of their gross income for             
          1992 by $68,279.  Petitioners contend that their gross income               
          should be reduced by such amount on the ground that the payment             
          that petitioner received from IBM is excludable from gross income           
          under section 104(a)(2).                                                    
               On April 18, 1997, respondent filed a Motion for Summary               
          Judgment.  In the motion, respondent asserts that the issues                
          raised in the notice of deficiency have been settled.4                      
          Respondent also asserts that the ITO payment is includable in               
          petitioners' gross income as a matter of law.  Relying primarily            
          on Commissioner v. Schleier, 515 U.S. 323 (1995), respondent                
          contends that a payment to a taxpayer may be excluded from gross            
          income under section 104(a)(2) only when the taxpayer can                   
          establish: (1) The underlying cause of action giving rise to the            
          payment is based upon tort or tort-type rights and (2) the                  
          payment is received by the taxpayer on account of personal                  
          injuries or sickness.  With these elements in mind, respondent              

          3    At the time that the petition was filed, petitioners resided           
          in Georgetown, Texas.                                                       
          4    No stipulation of settled issues or other such stipulation             
          has been filed by the parties regarding any of the issues raised            
          by the notice of deficiency.  Accordingly, we regard respondent's           
          motion as one for partial summary judgment only.                            

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