- 12 - Cir. 1997); McKay v. Commissioner, 102 T.C. 465, 482 (1994). For the taxable year under consideration, personal injuries included both physical and nonphysical injuries. See Commissioner v. Schleier, supra at 329 n.4. The Supreme Court has held that taxpayers may exclude damages received if the underlying cause of action giving rise to the recovery is based upon tort or tort type rights, and the damages are received on account of personal injuries or sickness. See id. at 336-337. Petitioner’s arguments are summarized as follows: (1) The claim for which the settlement was received generally sounded in tort; (2) petitioner has shown that he suffered mental and/or physical ailments in connection with actions of the defendants; and (3) under the law of the State of Alabama, petitioner’s claims, although generally or broadly stated as founded upon commercial harm, could have included petitioner’s mental suffering, and therefore the settlement is excludable under section 104(a)(2). Conversely, respondent’s arguments are summarized as follows: (1) The defendants’ actions and/or petitioner’s mental anguish is irrelevant because petitioner’s pleadings were based on a mixture of tort, tort type, and nontort claims, and the settlement did not distinguish between or specify any particular claim; (2) petitioner’s claims and the settlement were forPage: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Next
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