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The issue for decision is whether certain funds received in
connection with a medical malpractice lawsuit should be treated
as taxable interest income or as excludable income from personal
injuries. All references to petitioner in the singular are to
Rita Greer.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
At the time the petition was filed, petitioners resided in
Hammond, Louisiana.
Some time prior to 1985, petitioner was diagnosed with a
medical disease known as bacterial endocarditis. As a result of
the disease, petitioner sustained devastating injuries to her
heart and unfortunately will be subject to a lifetime of
associated medical and physical complications. In 1985,
petitioner filed a medical malpractice claim and a lawsuit
against the doctor who, she alleged, failed properly to diagnose
and treat her disease.
On December 3, 1992, petitioner won a jury verdict against
her doctor in the amount of $100,000 for pain and suffering,
disfigurement, and disability and in the amount of $70,000 for
medical expenses that had been incurred relating to her
endocarditis. On January 19, 1993, a court judgment was entered
in favor of petitioner reflecting the total jury award of
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