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personal injury under section 104(a)(2). We hold that $42,910
(28.61 percent of the $150,000 payment)1 was prejudgment interest
and is not excludable under section 104.
Unless otherwise specified, section references are to the
Internal Revenue Code in effect for the year in issue. Rule
references are to the Tax Court Rules of Practice and Procedure.
Background
The parties submitted this case fully stipulated under Rule
122.
A. Petitioners
Petitioners resided in Greenwich, Rhode Island, when the
petition was filed.
On January 18, 1987, petitioner Patricia A. Serpa (Mrs.
Serpa) was riding in a car driven by petitioner Manuel J. Serpa,
Jr. (Mr. Serpa), when it was struck by a car driven by Denise A.
Danis and owned by Daniel A. Danis (the Danises). Mrs. Serpa
suffered back injuries.
B. The Tort Action, Judgment, and Interest
Mrs. Serpa was represented by Joseph J. McGair (McGair), who
filed a personal injury lawsuit on her behalf in the Superior
Court of Rhode Island on July 17, 1989, against the Danises. The
1 The parties stipulated that if we find that a part of the
settlement is allocable to statutory interest, $42,910 of the
settlement is taxable income.
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