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Petitioners do not adequately explain how an examination
of the complaint in the superior court action supports the
conclusion that the entire award is excludable from income
under section 104(a)(2).
We disagree with petitioners' reading of Threlkeld
v. Commissioner, supra, and with their conclusion that the
entire award in the superior court action is excludable
from income under section 104(a)(2). In our view, none of
the award is excludable.
In Threlkeld v. Commissioner, supra at 1298, the Court
held that in deciding in a particular case whether the
damages were received on account of "personal injuries",
the nature of the claim as defined under State law, and
the concept of personal injury thereby embodied, are the
appropriate criteria in a case in which "damages are
clearly allocated to an identifiable claim". Id. at 1305-
1306. The Court pointed out that State law may be of
limited assistance in certain cases, such as in a
settlement where it is unclear what claim is settled or
where there are several claims not all of which involve
personal injuries. Id. In such cases, the Court pointed
out: "We must look to various factors, including the
allegations in the State court pleadings, the evidence
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