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the taxpayer must prove: (1) The underlying cause of action is
based upon tort or tort type rights, and (2) the damages were
received on account of personal injuries. See Commissioner v.
Schleier, 515 U.S. 323, 336 (1995).
Subject to an exception not relevant here, section 104(a)(3)
provides an exclusion from gross income of “amounts received
through accident or health insurance for personal injuries or
sickness”. (Emphasis added.) The mere fact that amounts in
question are paid by an insurance company under an insurance
policy does not establish that such amounts were actually paid
for injuries and sickness. The taxpayer has the burden of
proving this.
Petitioner’s auto insurance, regarding uninsured drivers,
apparently does not cover a nonvehicular accident that occurred
while the insured was riding his horse. Petitioner sought
medical help immediately after breaking his ankle. At that time
he informed hospital personnel that a horse had fallen on him.
When he was treated the next day he conveyed the same account to
the medical service providers. Petitioner was also a career
policeman who would understand the need to file a police report
immediately if he had been injured as a result of actions by an
uninsured motorist who had fled the scene of the accident.
Nevertheless, no such report was immediately filed. Indeed, it
was not until several weeks had lapsed, after petitioner had a
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