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A. Defamation
The State of Minnesota recognizes a cause of action based on
the tort of defamation. See Lake v. Wal-Mart Stores, Inc., 582
N.W.2d 231, 236 (Minn. 1998); Ferrell v. Cross, 557 N.W.2d 560,
562 (Minn. 1997); Bolton v. Department of Human Servs., 540
N.W.2d 523 (Minn. 1995). General or compensatory damages
received by way of settlement for injury to personal reputation
and health caused by defamatory statements are exempt from
taxation. See Seay v. Commissioner, supra at 40; Hawkins v.
Commissioner, 6 B.T.A. 1023 (1927).
Under well-settled Minnesota law, in order to establish a
prima facie case of defamation, the plaintiff must show (1) a
statement was communicated to someone other than the plaintiff,
(2) the statement was false, and (3) the statement tended to harm
the plaintiff’s reputation and to lower the plaintiff in the
estimation of the community. See Lewis v. Equitable Life
Assurance Socy. of the U.S., 389 N.W.2d 876, 886 (Minn. 1986);
Stuempges v. Parke, Davis & Co., 297 N.W.2d 252, 255 (Minn.
1980). “Slanders affecting the plaintiff in his business, trade,
profession, office or calling are slanders per se and thus
actionable without any proof of actual damages.” Stuempges v.
Parke, Davis & Co., supra at 255.
The record in this case establishes that petitioner made a
bona fide claim of defamation against Okabena. Petitioner
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