Alain and Monique Massot - Page 20

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           package was for severance compensation and petitioner’s agreement                           
           not to accept employment with a competitor of Millipore, and 54.4                           
           percent was on account of petitioner’s personal injuries or sickness                        
           arising from his firing.4  Our reasoning for this allocation is as                          
                 When petitioner’s employment with Millipore was terminated on                         
           September 22, 1992, petitioner’s annual salary was approximately                            
           $228,000.   Thus, the 18 months’ severance portion of Millipore’s                           
           offer was approximately $342,000.  Reducing the overall $750,000                            
           settlement package by $342,000 leaves $408,000, or 54.4 percent, for                        
           the personal injury portion of the settlement package.                                      
                 On the basis of this 54.4-percent allocation, we conclude that                        
           $326,400 of the $600,000 petitioner received in 1992 was paid on                            
           account of personal injuries or sickness and is excludable from                             
           petitioners’ gross income pursuant to section 104(a)(2), and the                            
           balance of $273,600 is taxable.                                                             

                  4     As stated, petitioner’s claims against Millipore did                           
            not sound solely in tort; petitioner’s claims were for breach of                           
            the employment contract as well.  Millipore initially offered                              
            petitioner a severance package including 18 months’ salary.  We                            
            infer that the settlement petitioner accepted in lieu of that                              
            offer incorporated the element of severance pay, though not                                
            designated as such in the agreement.                                                       

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