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OF ALASKA, DEPARTMENT OF PUBLIC SAFETY, JOHN HARMAN * *
* of and from all actions, causes of action, suits,
controversies, claims, and demands of every kind and
nature, mature or to mature in the future, for and by
reason of any damages, costs, expenses, and compensation,
whether for insurance proceeds, personal injury, bodily
injury, property damage, out-of-pocket expenses, loss of
earnings, loss of use, loss of consortium, loss of
services, attorney’s fees, punitive damages, or bad-faith
handling, or any other thing whatsoever, arising out of
an incident occurring on or about June 10, 1986, and any
and all claims embodied in David C. Norton v. John E.
Harmon [sic], et al. * * *
* * * * * * *
This release notwithstanding, nothing in this
agreement shall restrict the undersigned’s right to apply
* * * for a limited entry permit for the Norton Sound
beach seine herring sac roe fishery, nor shall it prevent
the undersigned from filing an administrative appeal with
respect to such a permit * * *
The net amount Mr. Norton received in 1993 (after reductions for
attorney’s fees and costs) was $26,280. The Nortons did not report
the settlement proceeds on their 1993 Federal income tax return.
In the notice of deficiency, respondent determined that the
proceeds received from the settlement of the Harman lawsuit were
taxable to Mr. Norton as compensation for lost fishing income.
Section 61(a) requires that taxpayers include in their gross
income all income from whatever source derived, absent a contrary
provision in the Internal Revenue Code (Code). Section 104(a)(2)
is one such provision. Pursuant to section 104(a)(2), gross income
does not include the amount of any damages received (whether by
suit or agreement) on account of personal injuries or sickness.
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