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to the proceeds must have been based upon tort or tort type
rights. Second, the tort-feasor must have paid the proceeds to
petitioner on account of personal injuries or sickness. To the
extent that petitioner fails either condition, section 104(a)(2)
will not operate to exclude the disputed amounts from his gross
income. See sec. 104(a)(2); O’Gilvie v. United States, 519 U.S.
79 (1996); sec. 1.104-1(c), Income Tax Regs.; see also
Commissioner v. Schleier, 515 U.S. 323, 333-334 (1995); Banks v.
United States, 81 F.3d 874, 876 (9th Cir. 1996); Bagley v.
Commissioner, 105 T.C. 396, 416 (1995), affd. 121 F.3d 393 (8th
Cir. 1997).
Petitioner argues that section 104(a)(2) reaches all of the
$2,315,000 awarded to him for loss of past and future
compensation and employment benefits. According to petitioner,
the underlying causes of action giving rise to his recovery of
that amount are tortlike by virtue of the fact that Harris was
found liable to him only for causes of action which are torts.
Petitioner asserts that the second condition for exclusion under
section 104(a)(2) also is met because he suffered damages to his
person rather than to a property interest of his. Respondent
argues that section 104(a)(2) does not apply to any of the
$2,315,000 because none of it was received on account of a
personal injury. Respondent asserts that petitioner received the
$2,315,000 as compensation for economic damages.
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