- 11 - information. The damages were intended to replace salary and benefits wrongfully taken from him “on account of” his constructive discharge--not because of any personal injury. Moreover, petitioner’s injuries did not prevent him from working at all--at BCal or elsewhere. We note that, after leaving BCal, petitioner actively searched for employment and was self- employed. Accordingly, petitioner’s economic damages are not “on account of personal injury or sickness” and as such, do not meet the Schleier test. Petitioner’s economic damages are not excludable from his gross income. B. Punitive Damages Petitioner also received $5 million in punitive damages. As with his economic damages, petitioner claims that section 104(a)(2) applies to exclude this amount from his gross income. Petitioner would have us accept his interpretation of the following legislation added to section 104(a)(2) in 1989: “Paragraph 2 [excluding from gross income any damages received on account of personal injuries or sickness] shall not apply to any punitive damages in connection with a case not involving physical injuries.” Petitioner contends that the use of a double negative in this phrase creates a positive. In other words, petitioner believes that Congress intended for all punitive damages to be excludable from gross income in any case involving physicalPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
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