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with a representative of PepsiCo damages suffered by him,
including harm to his business reputation through adverse
publicity in the press. In Noel, we did not hold that, in all
events, damages received on account of injury to professional
reputation that results from a tortious act are damages received
on account of personal injuries within the meaning of section
104(a)(2). Knevelbaard also involved a payment received in
settlement of a lawsuit. The Commissioner argued that the
payment was in settlement of contract claims, while the taxpayers
argued that it was for emotional distress. We agreed with the
taxpayers, stating only in passing that harm to reputation is a
traditional harm associated with personal injury. Knevelbaard
also does not establish the rule of law that petitioners
advocate.
We must consider all of the facts and circumstances to
determine whether the $500,000 payment was received on account of
personal injuries, as that term is used in section 104(a)(2).
2. Facts and Circumstances
The lawsuit was concluded on March 23, 1992, when
petitioners filed their notice of voluntary dismissal with
prejudice in the court in which the lawsuit was commenced (the
dismissal notice). Contemporaneously, petitioners and du Pont
executed the “General Release of All Claims” (the release). The
release recites the consideration to be received by petitioners.
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