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damages were received "on account of personal injuries
or sickness." * * *
Respondent concedes that Mr. Henry satisfies the first
requirement set forth in Schleier. However, respondent contends
that Mr. Henry has failed to establish that he satisfies the
second requirement set forth in Schleier because he has failed to
show that the $1,623,203 settlement payment that he received from
du Pont during 1994 was received "on account of personal injuries
or sickness" within the meaning of section 104(a)(2).
The second requirement set forth by the Supreme Court in
Commissioner v. Schleier, supra (as does the first requirement)
involves dual inquiries. In this case, those inquiries are
whether the claims of loss of business reputation and loss of
reputation as orchid growers, which Mr. Henry and Ms. Estes d/b/a
Fred Henry's Paradise of Orchids alleged in the complaint in the
lawsuit resulted from the negligence of du Pont and its defective
product Benlate, constitute personal injuries within the meaning
of section 104(a)(2) and, if so, whether the total settlement
amount of $2,800,000, and consequently the $1,623,203 settlement
payment that petitioner received during 1994, are damages re-
ceived on account of those injuries.
We address first Mr. Henry's contention that the $2,800,000
total settlement amount, and consequently the $1,623,203 set-
tlement payment, which the parties stipulated was paid as a
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