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for 1994 until October 31, 2000. Respondent issued the notice of
deficiency to petitioners on April 24, 2000.
OPINION
A. Whether Petitioners May Exclude From Gross Income Under
Section 104(a)(2) $59,163 That Petitioner Received in 1994
Petitioners contend that the $59,163 that petitioner
received from Xircom in 1994 is excludable from gross income as
damages for a personal injury under section 104(a)(2).3
Petitioners contend that Xircom and AT&T colluded to prevent
petitioner from being employed by either of them. Petitioners
contend that, because of petitioner’s job situation, they became
physically ill, lost sleep, suffered emotional distress, and were
divorced, and that the payments were on account of those personal
injuries.4
3 Sec. 104(a)(2) provides:
SEC. 104(a). In General.--Except in the case of amounts
attributable to (and not in excess of) deductions allowed under
section 213 (relating to medical, etc., expenses) for any prior
taxable year, gross income does not include--
* * * * * * *
(2) 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;
4 For the year in issue, personal injuries included both
physical and nonphysical injuries. Commissioner v. Schleier, 515
U.S. 323, 329 n.4 (1995).
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