Carl J. Fabry and Patricia P. Fabry - Page 1

                                   111 T.C. No. 17                                    


                               UNITED STATES TAX COURT                                


                 CARL J. FABRY AND PATRICIA P. FABRY, Petitioners v.                  
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      


               Docket No. 9126-96.                Filed December 16, 1998.            


                    Ps sued the manufacturer of an agricultural                       
               chemical, claiming tortious injury to their nursery                    
               business.  The suit was settled and Ps received a                      
               payment, of which $500,000 was allocable to their claim                
               of injury to their business reputation.  Ps argue that                 
               damages received on account of injury to business                      
               reputation are, as a matter of law, received on account                
               of personal injuries within the meaning of sec.                        
               104(a)(2), I.R.C.                                                      
                    Held:  Whether damages received on account of                     
               injury to business reputation are on account of                        
               personal injuries within the meaning of sec. 104(a)(2),                
               I.R.C., is a question of fact.  Held, further, Ps have                 
               failed to prove that the $500,000 payment in question                  
               was received on account of personal injuries within the                
               meaning of sec. 104(a)(2), I.R.C.                                      


               Robert S. MacDonald and Brian J. Moran, for petitioners.               





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