James W. Taylor - Page 4




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          representative, withdraw all appeals and grievances."                       
          Petitioner also agreed to the following:                                    
               all claims, demands, rights, causes of action, the                     
               administrative remedies that [petitioner] has or may                   
               have against [CWU], its successors and assigns, and                    
               each and every one of the past or present employees,                   
               students, agents, attorneys, or representatives of                     
               [CWU], in their individual and official capacities                     
               arising from or related to his employment are                          
               satisfied, discharged and settled.                                     
               CWU agreed to pay petitioner $25,000, reduced by any                   
          compensation benefits (other than medical benefits) received as a           
          result of his shoulder injury.  On account of his shoulder                  
          injury, petitioner received a benefit from the Washington State             
          Department of Labor and Industries in the amount of $3,604.80, of           
          which $2,926.80 represented a benefit for lost compensation and             
          $678 represented medical benefits.  Accordingly, in March 1993,             
          CWU paid petitioner $22,073.20.  Petitioner contends that the               
          payment from CWU is excludable from gross income under section              
          104(a)(2).                                                                  
               Section 104(a)(2) excludes from gross income "the amount of            
          any damages * * * received (whether by suit or agreement and                
          whether as lump sums or as periodic payments) on account of                 
          personal injuries or sickness."  The term “damages * * * received           
          (whether by suit or agreement * * *)” means an amount received              
          (other than workmen's compensation) through prosecution of a                
          legal suit or action based upon tort type rights, or through a              
          settlement agreement entered into in lieu of such prosecution.              





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