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Since the record of the lawsuit that is before us does not
include any claim for personal injuries within the meaning of
section 104(a)(2), we do not believe that the claim for injury to
business reputation was on account of personal injuries, as that
term is used in section 104(a)(2). Indeed, the stipulation on
its face excepts personal injury from its coverage.
3. Conclusion
The $500,000 payment is allocable to business reputation
damages. Nevertheless, petitioners have failed to prove that the
$500,000 payment was received on account of “personal injuries”,
as that term is used in section 104(a)(2).
IV. Conclusion
Petitioners have shown no grounds to exclude the $500,000
payment from gross income. Respondent’s determination of a
deficiency is sustained to the extent attributable to
petitioners' omission of the $500,000 payment from gross income.
Decision will be entered
under Rule 155.
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Last modified: May 25, 2011