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fighting. The union filed a grievance on Mr. Banks' behalf and
subsequently settled the matter; Mr. Banks objected to the terms of
the agreement. He then sued the union for breach of its duty of
fair representation. Mr. Banks prevailed on that cause of action
in the district court and agreed to settle with the union before the
entry of judgment.
Mr. Banks did not report as income the amount he received from
the union, and after examination and assessment, he paid the tax and
sued for a refund. He prevailed in the District Court, where the
court held that the settlement was of a tortlike cause of action and
the sum paid for the breach of duty of fair representation was on
account of personal injuries within the meaning of section
104(a)(2). Banks v. United States, 94-2 USTC par. 50,630 (W.D.
Wash. 1994). The U.S. Court of Appeals for the Ninth Circuit
affirmed, noting that "Unions do not pay wages to their members, and
what the Union paid in settlement here to Banks did not constitute
wages." 81 F.3d at 876.
In this case, the $1,125,000 settlement payment compensated
petitioner for his 21 years of past service in building the value
of WMC and related entities, as well as for his amicable severance
of employment from WC generally. See, e.g., Britell v.
Commissioner, T.C. Memo. 1995-264. Petitioner has not demonstrated
what injuries he had or might have had as a result of his
termination. Petitioner did not testify as to why he believed he
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