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settlement agreement does not specifically state why the
settlement proceeds were paid, we must look at surrounding facts,
including the underlying amended complaint, to decide the intent
of Liberty Life in entering into the settlement.
A careful examination of the amended complaint demonstrates
that the relief requested was not solely for personal injury or
sickness. Thus, the amended complaint included four counts,
which asserted claims for detrimental reliance, concealment and
suppression, conversion, and beach of fiduciary duty. The
damages sought for each cause of action were identical in that
petitioner sought recovery of an unspecified sum for actual
damages, general damages, punitive damages, and such other
damages as authorized by Alabama law.
The amended complaint contained no particularized
allegations regarding personal injury or sickness arising from
Liberty Life’s conduct. In fact, the only allegation of any type
of personal injury is found in the first cause of action
(regarding detrimental reliance) and that allegation, which is
both conclusory and fleeting, reads in its entirety as follows:
"Further, the Plaintiff has suffered mental anguish and will so
suffer in the future."
We observe at this point that the mere mention of emotional
harm in a complaint does not, by itself, serve to exclude the
recovery from gross income under section 104(a)(2). Clearly,
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