- 10 - that the damages awarded were actually based on length of employment and number of hours worked by petitioner. Damages for petitioner’s personal injuries, however real and distressful for petitioners, were not claimed in the class action lawsuit against PayLess, nor was the Settlement Agreement intended to provide relief for such injuries. The class action notice informed petitioners that they were not required to join the class action. The notice clearly stated that “if you choose not to join this suit, you are free to file your own lawsuit with an attorney of your choosing.” In order for petitioners to prevail under section 104(a)(2), both components of the test, as stated above, must be satisfied. Petitioners failed to show that the settlement award was paid as compensation for personal injury or sickness. Therefore, the entire settlement award is includable in gross income, and petitioners are entitled to a corresponding deduction for attorney’s fees and costs under section 67(a), subject to limitations. We have considered all arguments by the parties, and, to the extent not discussed above, conclude that they are irrelevant or without merit.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011