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gross income under section 104(a)(2). See United States v.
Burke, supra at 237. The crucial question is "in lieu of what
was the settlement amount paid." Bagley v. Commissioner, 105
T.C. 396, 406 (1995), affd. 121 F.3d 393 (8th Cir. 1997).
Determining the nature of the claim is a factual inquiry. See
Robinson v. Commissioner, supra at 127.
Here, the complaint in the class action was exclusively for
recovery of "overtime compensation, liquidated damages, attorney
fees and costs" under the Fair Labor Standards Act of 1938.
Nowhere in the complaint or in the Settlement Agreement is there
any reference to or any indication that the recovery included
damages for physical or mental injuries. Moreover, the record
satisfies the Court that petitioner's claim to physical and
mental injuries was not called to the attention of PayLess or its
attorneys in connection with the class action. Since there was
no claim made for such injuries by petitioner, the rhetorical
question posed in Bagley v. Commissioner, supra, is that whatever
the settlement was for, it certainly was not for personal
injuries attributable to the injuries petitioner claims.5
Moreover, the general language relied on by petitioner in the
Settlement Agreement that "all settlement proceeds are paid to
plaintiffs on account of personal injuries" is inconsistent with
5 Indeed, some of the injuries petitioner complains of
occurred long after his employment with PayLess.
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