- 14 -
Commissioner, supra at 613.
The evidence does not demonstrate that Liberty Life
specifically intended to compensate petitioner on account of
personal injury or sickness. For instance, the record is silent
as to whether the negotiations leading to the settlement
agreement involved any discussion regarding personal injuries
that petitioner may have suffered. Indeed, there is nothing in
the record to suggest that Liberty Life was aware of any personal
injury that petitioner may have suffered. In this regard, and as
previously stated, the amended complaint makes no mention of
personal injuries or sickness, other than the tangential
reference to “mental anguish” in the first cause of action.
The settlement agreement is embodied in the form of a
standardized release, of which “a primary motivation and
consideration on the part of [Liberty Life] * * * in payment of
the settlement amount is to eliminate the punitive damage
claims”. A standardized release may be indicative that the
payment was not made “on account of” personal injuries. See
Laguaite v. Commissioner, supra; Gajda v. Commissioner, T.C.
Memo. 1997-345, affd. 158 F.3d 802 (5th Cir. 1998). Moreover, as
previously stated, punitive damages ordinarily are not received
“on account of” personal injuries or sickness and are therefore
includable in gross income. See O’Gilvie v. Commissioner, supra.
When a settlement resolves a number of claims and does not
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