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This Court reached a similar conclusion with respect to an
analogous claim for tortious interference in Kightlinger v.
Commissioner, supra. In that case, the taxpayer received payment
in settlement of a claim of tortious interference with
prospective economic advantage as an employee. The complaint in
the underlying litigation sought a remedy for wrongful
interference with economic advantages, and the taxpayer had not
sought or obtained redress for any of the traditional harms
associated with personal injury such as pain and suffering or
emotional distress. This Court concluded: “Clearly, recovery
for economic injury based on such a contractual type claim is
excluded from the scope of section 104(a)(2).”
Petitioners’ reliance on this Court’s decision in Noel v.
Commissioner, T.C. Memo. 1997-113, is misplaced. In Noel, this
Court held that the taxpayer was entitled to exclude under
section 104(a)(2) an allocable amount received by the taxpayer in
settlement of claims, including a claim for tortious interference
with contractual rights and prospective business advantages. In
Noel, the record supported a finding of fact that the taxpayer
had suffered both personal emotional distress and damage to his
business reputation, and that these damages had been discussed
during the negotiations that resulted in a settlement.
By contrast, in the case at hand, petitioners have failed to
prove that the damages award on petitioner’s claim for
interference with a business relationship was received on account
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