- 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