Wade H. Griffin, III - Page 14




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               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.                                            





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