- 33 -
It is clear from the Supreme Court's decision that the issue
of whether punitive damages received in a tort suit are excluded
under section 104(a)(2) was unresolved at the time petitioners
filed their returns for 1991 and 1992.
Furthermore, before the decision in O'Gilvie v. United
States, supra, this Court decided Estate of Moore v.
Commissioner, T.C. Memo. 1994-4, revd. and remanded 53 F.3d 712
(5th Cir. 1995). In Estate of Moore, we held, citing Threlkeld
v. Commissioner, 87 T.C. 1294 (1986), and Roemer v. Commissioner,
716 F.2d 693 (9th Cir. 1983), that punitive damages received in a
settlement of a lawsuit for malicious prosecution and invasion of
privacy may be excluded from gross income pursuant to section
104(a)(2).
The Court of Appeals for the Fifth Circuit reversed Estate
of Moore v. Commissioner, supra, holding that punitive damages
awarded under Texas law are not intended to compensate plaintiffs
for injury and are therefore not excludable under section
104(a)(2). Estate of Moore v. Commissioner, 53 F.3d at 715-716.
After we decided Estate of Moore, but before it was
reversed, this Court decided Robinson v. Commissioner, 102 T.C.
19(...continued)
received pursuant to any suit filed on or before July 10, 1989.
Petitioners filed suit in 1985 and are therefore within the
exception to the amendment.
The Supreme Court decided the issue in O'Gilvie v. United
States, 519 U.S. 79, 117 S. Ct. 452 (1996), upon the preamendment
version of sec. 104(a)(2); the holding is therefore applicable to
petitioners in this case.
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