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In advancing their position in Fabry I, the Fabrys main-
tained that injury to business reputation is, as a matter of law,
a personal injury within the meaning of section 104(a)(2). See
id. at 309. We rejected that argument. See id. at 310-311.
Having rejected the Fabrys’ argument that injury to business
reputation is, as a matter of law, a personal injury within the
meaning of section 104(a)(2), we examined the facts and circum-
stances surrounding the $500,000 payment at issue in that case in
order to determine whether that payment was made on account of
personal injuries, as that term is used in section 104(a)(2).
See id. at 311-314. Based on our examination of all the facts
and circumstances surrounding that $500,000 payment, we concluded
in Fabry I:
Since the record of the lawsuit that is before us
does not include any claim for personal injuries within
the meaning of section 104(a)(2), we do not believe
that the claim for injury to business reputation was on
account of personal injuries, as that term is used in
section 104(a)(2). * * *
Id. at 314.
The Court of Appeals reversed our decision in Fabry I in
Fabry v. Commissioner, 223 F.3d 1261 (11th Cir. 2000) (Fabry II).
After reviewing certain case law under section 104(a)(2), the
Court of Appeals turned to this Court’s opinion in Fabry I. The
Court of Appeals acknowledged in Fabry II that “The IRS stipu-
lated at trial that the $500,000 payment was properly allocable
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