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cannot be clearly discerned from the settlement agreement, the
intent of the payor must be determined from all the facts and
circumstances of the case, including the complaint filed and
details surrounding the litigation. Robinson v. Commissioner,
supra at 127.
We start our analysis with the second requirement of
Commissioner v. Schleier, supra. The “taxpayer must show that
the damages were received ‘on account of personal injuries or
sickness.’” Id. at 337. Subsequent to the Court’s opinion in
Schleier, Congress amended section 104(a)2 to provide that
amounts are excludable only if received “on account of personal
physical injuries or physical sickness”. Sec. 104(a)(2)
(emphasis added).
Petitioners stipulated that no portion of the damages was
paid on account of “physical injuries or physical sickness”, and
that should end the matter.
To the extent, however, that petitioners contend that they
should not be bound by the stipulation of facts,3 even if they
had not entered into the stipulation, the result is the same.
2 Small Business Job Protection Act of 1996, Pub. L. 104-
188, sec. 1605, 110 Stat. 1838, effective for amounts received
after Aug. 20, 1996.
3 In their posttrial memorandum, petitioners suggest that
they were unduly pressured into signing the stipulation of facts.
For the reasons stated above, we do not find it necessary to
decide that issue. We note, however, there is nothing in the
record to support that allegation.
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