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obligation owed to petitioner and of interest, and does not
involve damages received through prosecution of tort or
tort-type rights, the entire award is excluded from gross
income under section 104(a)(2).
Petitioners ask us to reach the same conclusion, i.e.,
that the entire jury award is excluded from gross income
under section 104(a)(2), on the basis of a reading of
Threlkeld v. Commissioner, 87 T.C. 1294 (1986), affd. 848
F.2d 81 (6th Cir. 1988). Petitioners' posttrial brief
makes the following argument:
[In Threlkeld v. Commissioner, supra,] The
court noted at page 1307 that even though the
settlement agreement allocated the sum of $75,000
for damages to petitioners [sic] professional
reputation, (the taxability of $21,500 [of]
which was the issue in the case), the settle-
ment agreement does not necessarily control in
deciding whether the claim being settled arises
from a personal injury. The court said:
"We therefore, look to the
petitioners [sic] allegations in his
complaint in the State court."
The relevance of this last statement to
Petitioner is most important to note. Namely,
the jury may have given an award on the second
cause of action for breach of the covenant of
good faith and fair dealing, but the meaning of
the language from Threlkeld is that to answer
the question of whether the award represents
compensation for personal injuries, the court
said the allegations in the complaint must be
examined.
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