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As previously discussed, damages received in a tort action
may be excluded from income only when received on account of
personal injuries or sickness. As noted in our original opinion,
tortious interference with a business relationship is part of a
larger body of tort law aimed at protecting relationships, some
economic (for example, interference with prospective economic
advantage) and some personal (for example, interference with
family relations, or libel and slander). Keeton et al., Prosser
& Keeton on the Law of Torts, sec. 129, at 978 and nn.5 and 6
(5th ed. 1984). Petitioners have failed to demonstrate that the
jury award for tortious interference with a business relationship
was on account of anything other than injury to petitioner’s
economic relationship with his bank.
Petitioners’ reliance on Noel v. Commissioner, T.C. Memo.
1997-113 (holding that part of a settlement payment attributable
to a tortious interference claim was on account of personal
injuries), is misplaced. In Noel, the evidence before the Court
indicated that the tortfeasor’s actions caused the taxpayer to
suffer emotional distress and damage to his business reputation,
that the taxpayer discussed these damages with the tortfeasor
during the settlement negotiations, and that the payment by the
tortfeasor was intended partly to cover this tort claim.
The only evidence petitioners cite to support their argument
that the tortious interference award was on account of personal
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