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advancing their position, the Fabrys maintained that injury to
business reputation is, as a matter of law, a personal injury
within the meaning of section 104(a)(2). See id. at 309. We
rejected that argument. See id. at 310-311. In so holding, we
stated:
In Threlkeld v. Commissioner, supra, we decided not to
follow our decision in Roemer v. Commissioner, 79 T.C.
398 (1982), revd. 716 F.2d 693 (9th Cir. 1983), in
which we distinguished between injury to personal
reputation and injury to business reputation and held
that damages awarded on account of defamation resulting
in injury to business reputation did not give rise to
damages received on account of personal injuries within
the meaning of section 104(a)(2). We did not, in
Threlkeld, adopt a per se rule that damages received on
account of injury to an individual's business reputa-
tion are excludable under section 104(a)(2). We de-
scribed the necessary determination as presenting a
question of fact. Threlkeld v. Commissioner, supra at
1305. We said that the determination depended on the
nature of the claim presented, and we looked to all the
facts and circumstances of the case, including the
State law characterization of the claim in question (a
claim for malicious prosecution) to determine the
nature of that claim. Id. at 1307-1308. We found that
an action for malicious prosecution is similar to an
action for defamation and concluded that it would be
classified as an action for personal injuries under
Tennessee law. Id. at 1307. We concluded that the
payment received for the release of the taxpayer's
claims against the defendant for damage to the tax-
payer's professional reputation was excludable under
section 104(a)(2).
Id. at 310.
Having rejected the taxpayers' argument in Fabry that injury
to business reputation is, as a matter of law, a personal injury
within the meaning of section 104(a)(2), we examined the facts
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