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on the words “Workmen’s Compensation”, which appear in that
paragraph, and claim those words “clearly indicated that payments
under this paragraph were intended to compensate petitioner for
personal injuries.” Petitioners contend that use of the words
“Workmen’s Compensation” instead of the words “personal injuries”
is “of little moment because workers’ compensation by definition
covers on-the-job personal injuries.” These contentions,
however, do not establish the applicability of section 104(a)(2).
Settlement amounts which are paid to settle workers’
compensation claims are not excludable from gross income under
section 104(a)(2).20 It is true that workers’ compensation
claims involve personal injuries which arise from and in the
course of employment. See, e.g., Take v. Commissioner, 804 F.2d
553, 557 (9th Cir. 1986), affg. 82 T.C. 630 (1984). However,
claims for workers’ compensation do not necessarily involve tort
or tort type rights. A worker’s compensation claim is not itself
a tort or tort type cause of action since its compensatory
20See sec. 1.104-1(c), Income Tax Regs., which provides:
(c) Damages received on account of personal
injuries or sickness.--Section 104(a)(2) excludes from
gross income the amount of any damages received
(whether by suit or agreement) on account of personal
injuries or sickness. The term “damages received
(whether by suit or agreement)” means an amount
received (other than workmen’s compensation) through
prosecution of a legal suit or action based upon tort
or tort type rights, or through a settlement agreement
entered into in lieu of such prosecution. [Emphasis
added.]
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