F. Browne Gregg, Sr., and Juanita O. Gregg - Page 2




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          petitioner) pursuant to judgments against U.S. Industries, Inc.             
          (USI), on claims for both fraudulent inducement to enter into a             
          contract and tortious interference with a business relationship,            
          plus prejudgment interest, are not excludable from gross income             
          as damages received “on account of personal injuries or sickness”           
          within the meaning of section 104(a)(2).1  In reaching this                 
          conclusion, we cited Fabry v. Commissioner, 111 T.C. 305 (1998),            
          for the proposition that we must look to all the facts and                  
          circumstances to determine the nature of petitioner’s claims                
          against USI and whether his recoveries on those claims were on              
          account of personal injuries or sickness.                                   
               While the instant case was pending on appeal there, the                
          U.S. Court of Appeals for the Eleventh Circuit reversed this                
          Court’s decision in Fabry, stating that the “facts and                      
          circumstances approach” used therein was “insufficient.”  Fabry             
          v. Commissioner, 223 F.3d 1261, 1269 (11th Cir. 2000).                      
          Thereafter, the Court of Appeals vacated our decision in the                
          instant case and remanded it for further consideration in light             
          of its decision in Fabry, stating:  “We imply no view as to the             
          result that should be reached on remand.”                                   




               1 Unless otherwise indicated, all section references are to            
          the Internal Revenue Code in effect for the year in issue, and              
          all Rule references are to the Tax Court Rules of Practice and              
          Procedure.                                                                  





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