- 6 - The settlement agreement does not reference whether the damage award was based on the Civil Rights Act of 1964 or 1991. However, Rockford clearly intended to pay petitioner a settlement in compensation of her emotional distress. The settlement agreement clearly stated that the $35,000 was to compensate her for “emotional injuries”. Section 104(a) provides that “emotional distress shall not be treated as a physical injury or sickness.” The Committee Report provides “that the term emotional distress includes physical symptoms (e.g., insomnia, headaches, stomach disorders) which may result from such emotional distress.” H. Rept. 104-586 (1996), 1996-3 C.B. 331, 482 n.24. Thus, petitioner’s headaches, insomnia, and stomach problems were intended by Congress to be treated as emotional distress, and therefore the compensation for those symptoms is not excluded from gross income under section 104(a)(2). Moreover, assuming that hypertension is a physical injury (a point that we specifically do not decide) we cannot find that Rockford intended to compensate petitioner for her hypertension. Petitioner’s medical records submitted to this Court establish that petitioner was first diagnosed with borderline hypertension in May of 1993. Petitioner was later hospitalized in June of 1993 for hypertension, weakness, and hyponatremia. Petitioner alleged that she suffered racial discrimination in 1995, perhapsPage: Previous 1 2 3 4 5 6 7 8 Next
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