Marsha M. Bland - Page 1

                                        T.C. Memo. 2000-98                                             

                                     UNITED STATES TAX COURT                                           

                                 MARSHA M. BLAND, Petitioner v.                                        
                        COMMISSIONER OF INTERNAL REVENUE, Respondent                                   

                  Docket No. 24846-97.                   Filed March 22, 2000.                         

                        In connection with a corporate reorganization and                              
                  consequent termination of her employment, P                                          
                  participated in an enhanced severance program offered                                
                  to eligible employees.  Under this program, P received                               
                  a lump-sum payment, calculated based upon rate of pay                                
                  and years of service, in return for signing a general                                
                  release of all claims against her employer.  An                                      
                  identical payment formula was applied and release                                    
                  document signed in the case of each participating                                    
                  employee.  P excluded this payment from income, and R                                
                  determined a deficiency for taxes attributable thereto.                              
                  P contends that the payment was received in settlement                               
                  of and to compensate for emotional distress she                                      
                  suffered as a result of sexual harassment in the                                     
                  workplace and, therefore, is excluded from income                                    
                  pursuant to sec. 104(a)(2), I.R.C.                                                   
                        Held:  The payment received by P is not excludable                             
                  from income under sec. 104(a)(2), I.R.C., as damages                                 
                  received on account of personal injuries or sickness.                                

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