- 10 - excludable under [section 104(a)(2)]”. Petitioners state: “No special causation analysis was utilized in the Noel and Knevelbaard decisions nor was one necessary.” In the Noel case, the taxpayer had sued PepsiCo, Inc. (PepsiCo), claiming both breach of contract and tortious interference with contractual rights and prospective business advantages. The case was settled, and the taxpayer received an undifferentiated amount in settlement of all of his claims. We found that PepsiCo’s actions had caused the taxpayer to suffer emotional distress and had resulted in damage to the taxpayer’s business reputation. We also found that the settlement payment was intended to settle both the taxpayer’s contract claims and the tort claims. We divided the settlement amount between those two categories and held that the amount allocable to the tort claims was excludable under section 104(a)(2). A fair reading of our report is that we included as a tort claim the claim for damage to the taxpayer’s business reputation (the business reputation claim). We did not state how much (if any) of the tort claim recovery was allocable to the business reputation claim, but it is a fair reading of our report that some of it was. We did not discuss at length our reasons for concluding that the unstated allocation to the business reputation claim was on account of personal injuries within the meaning of section 104(a)(2). We did find, however, that, during settlement negotiations, the taxpayer had discussedPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
Last modified: May 25, 2011