- 12 - United States v. Burke, supra at 235 n.6; Fabry v. Commissioner, supra at 309. The Supreme Court has also noted specifically with regard to discrimination that “the intangible harms of discrimination can constitute personal injury, and * * * compensation for such harms may be excludable under � 104(a)(2).” Commissioner v. Schleier, supra at 332 n.6. Intangible harms recognized as within the scope of the statute include those affecting emotions, reputation, or character. See United States v. Burke, supra at 235 n.6; Fabry v. Commissioner, supra at 309. Hence, as a threshold matter, we acknowledge that petitioner’s alleged injuries are personal in nature. However, because exclusion under section 104(a)(2) depends not only on the nature of the injuries but also on the purpose of the payment, “the critical question is, in lieu of what was the settlement amount paid.” Bagley v. Commissioner, 105 T.C. 396, 406 (1995), affd. 121 F.3d 393 (8th Cir. 1997). In the words of this Court: “If the settlement agreement lacks express language stating that the payment was (or was not) made on account of personal injury, then the most important fact in determining how section 104(a)(2) is to be applied is ‘the intent of the payor’ as to the purpose in making the payment.” Metzger v.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011