- 6 -
104(a)(2) and the applicable regulations." Id. at 241.
Accordingly, the settlement amounts received by the taxpayers
were not excludable from gross income under section 104(a)(2).
Id. at 242.
Like the taxpayers in Burke, petitioner brought a sex
discrimination claim under Title VII of the Civil Rights Act of
1964 against her employer. As in Burke, petitioner eventually
settled her claim. The Settlement Agreement and General Release
provides:
The approximate full value of CLAIMANT's claim under the
Consent Decree damage formula as of February 1, 1992, is
$264,935.00, which represents back pay as a State Farm agent
accrued from the year of the challenged appointment to
February 1, 1992, plus six months of front pay from that
date forward.
The settlement amount of $135,000 offered to petitioner
represented 51 percent of the estimated Consent Decree value of
her claim. According to Burke, since the damages available to
petitioner as a Title VII claimant consisted of only wages, which
would otherwise be taxable, the settlement amount she received
does not constitute "damages received * * * on account of
personal injuries". Id. at 242. Thus, it is not excludable
under section 104(a)(2).2
2 In November 1991, the Civil Rights Act of 1991 became
law. Landgraf v. USI Films Prods., 511 U.S. 244, 249 (1994). In
addition to the traditional remedies of backpay and injunction,
the new act allows the plaintiff to recover compensatory and
punitive damages. It also gives the right to a jury trial. Id.
at 252-253. The Supreme Court held that those amendments did not
(continued...)
Page: Previous 1 2 3 4 5 6 7 Next
Last modified: May 25, 2011