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proof on a factual issue, petitioner must introduce credible
evidence relating to the issue. Sec. 7491(a). Evidence is
credible if a court would find it “sufficient upon which to base
a decision on the issue if no contrary evidence were submitted”.
Higbee v. Commissioner, 116 T.C. ___, ___ (2001) (slip op. at 8)
(quoting H. Conf. Rept. 105-599 at 240 (1998), 1998-3 C.B. 755,
994). In addition, petitioner must comply with the Code’s
substantiation requirements, maintain all records required by the
Code, and cooperate with respondent. Sec. 7491(a). We address
the burden of proof separately as it relates to each issue.
I. The Settlement
Respondent determined that the $15,920 payment from Brevard
County was subject to tax. Petitioner contends that this payment
was excludable from income pursuant to section 104(a)(2). This
section excludes from gross income “the amount of any damages
* * * received (whether by suit or agreement and whether as lump
sums or as periodic payments) on account of personal injuries or
sickness”. An amount may be excluded only when it was received
both: (1) Through prosecution or settlement of an action based
upon tort or tort type rights, and (2) on account of personal
injuries or sickness. Commissioner v. Schleier, 515 U.S. 323,
336-337 (1995); sec. 1.104-1(c), Income Tax Regs.
A settlement of claims arising under the ADA, if paid on
account of personal injury or sickness, may qualify for exclusion
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Last modified: May 25, 2011