Clarence D. Kightlinger - Page 28

                                       - 28 -                                         

                        *     *     *     *     *     *     *                         
                    Second, and more importantly, the holding of Burke is             
               narrower than [appellee] suggests.  In Burke, following the            
               framework established in the Internal Revenue Service                  
               regulations, we noted that � 104(a)(2) requires a                      
               determination whether the underlying action is "based upon             
               tort or tort type rights."  * * *  In so doing, however, we            
               did not hold that the inquiry into "tort or tort type                  
               rights" constituted the beginning and end of the analysis.             
               In particular, though Burke relied on Title VII's failure to           
               qualify as an action based upon tort type rights, we did not           
               intend to eliminate the basic requirement found in both the            
               statute and the regulation that only amounts received "on              
               account of personal injuries or sickness" come within �                
               104(a)(2)'s exclusion.  Thus, though satisfaction of Burke's           
               "tort or tort type" inquiry is a necessary condition for               
               excludability under � 104(a)(2), it is not a sufficient                
               condition. [Fn. ref. omitted.]                                         
               Because the record does not establish that the settlement              
          recovery was attributable to any personal injury, we need not               
          decide whether the underlying class action was tort-type.                   
          4.  Conclusion                                                              
               Consistent with the requirement that exclusions from income            
          are to be narrowly construed, we hold that the settlement                   
          proceeds received by petitioner are not excludable from gross               
          income under section 104(a)(2).                                             
              Petitioner has raised other arguments that we have                     
          considered in reaching our decision.  To the extent that we have            
          not discussed these arguments, we find them to be without merit.            

Page:  Previous  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  29  Next

Last modified: May 25, 2011