John R. and Sara E. Wise - Page 12

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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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