- 14 - In summary, with respect to the first prong of the Schleier test, petitioner has shown that some tort or tort type rights were pleaded in the proceedings, which ended in settlement, but there was no specific pleading of personal injury or sickness. The more crucial question is whether petitioner has shown that the settlement was received on account of personal injuries or sickness. The law is well settled that the tax consequences of an award for damages depend upon the nature of the litigation and on the origin and character of the claims adjudicated, and not upon the validity of those claims. See Bent v. Commissioner, 87 T.C. 236 (1986), affd. 835 F.2d 67 (3d Cir. 1987); Glynn v. Commissioner, 76 T.C. 116, 119 (1981), affd. without published opinion 676 F.2d 682 (1st Cir. 1982); Seay v. Commissioner, 58 T.C. 32, 37 (1972). In this case, petitioner received a global settlement intended to release the defendants from any claims that petitioner might have had. In Commissioner v. Schleier, supra, the Supreme Court cautioned that there must be a direct link between the personal injury and the recovery of damages for the section 104(a)(2) exclusion to apply. Although petitioner has shown, by the 3(...continued) allege and prove personal injuries and/or sickness. We assume for purposes of this case that this legal position is correct. Irrespective of our views on that point of law, the outcome of this case would remain the same.Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Next
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