- 10 - 104(a)(2). However, petitioner’s argument assumes that the origin of the claim is the only relevant inquiry. A two-part test for the section 104(a)(2) exclusion was established in Commissioner v. Schleier, 515 U.S. 323, 333 (1995). Schleier requires that, in addition to the law suit’s being based upon a tort claim, the damages received must have been “on account of personal injuries or sickness”. Id. The factual circumstances in this case reflect that petitioner’s economic damages were not “on account of personal injuries or sickness”. Rather, petitioner’s economic damages were intended to replace wages and other compensation lost when he was forced to leave his job. While in some circumstances economic damages measured by lost wages can satisfy the second prong of the Schleier test, petitioner’s economic damages do not. For instance, if a taxpayer were unable to work as a direct result of his physical injuries, the economic damages he received to replace his lost wages would be excludable. Id.; Rev. Rul. 85-97, 1985-2 C.B. 50. In short, the taxpayer’s physical injuries would have been the direct cause of his inability to work. Although petitioner was forced to leave his job because of a tort and he had manifestations of emotional distress, he was not forced to leave his job because of those injuries. Rather, he was forced to leave because he refused to disclose confidentialPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
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