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decision is whether $20,000 paid to petitioner in 1990 by his
former employer is excludable from gross income under section
104(a)(2). The resolution of this issue depends upon whether
petitioner's former employer intended the payment to compensate
him for personal injury arising from a tort or tort type claim.
Undisputed Factual Background
Some of the facts have been stipulated, and they are so
found. At the time the petition was filed, petitioner resided in
Springfield, Missouri.
In June 1989, petitioner, an attorney who apparently did not
practice law during the year in issue, was hired as the vice
president of institutional marketing and sales for Comprehensive
Marketing Systems, Inc. (CMS). During the relevant periods CMS
specialized in subservicing poorly performing loans for other
financial institutions. During 1990, CMS earned gross receipts
totaling approximately $12 million from 8 to 10 different loan
servicing contracts.
Petitioner was hired by James Griffin, the president and
sole shareholder of CMS, to develop a plan to market loan
servicing to financial institutions in the mortgage lending and
servicing business. CMS anticipated that petitioner's sales and
marketing plan would generate revenues through the acquisition of
additional loan servicing contracts.
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