- 7 - The settlement agreement did not allocate the award to any specific type of damages. The settlement agreement referenced the three claims alleged by petitioner in the complaint, and petitioner alleged that he suffered “extreme humiliation”, “embarrassment”, and “severe emotional distress” as a result of Dana’s conduct. The flush language of section 104(a) provides that “For purposes of paragraph (2), emotional distress shall not be treated as a physical injury or physical sickness.” Assuming petitioner did receive damages for his emotional distress, humiliation, and embarrassment, that award would not be excludable under section 104(a)(2). As to his argument that he received the award on account of personal physical injury, not only is this argument precluded by the stipulation of facts and the settlement agreement, but petitioner failed to provide any documentary or testimonial evidence that Dana compensated him, through the settlement award, for such an injury.4 We need not address whether “the underlying cause of action giving rise to the recovery * * * [was] ‘based upon tort or tort type rights’”, Commissioner v. Schleier, supra at 337, as we find that the settlement proceeds were not based on personal physical injuries or sickness. We hold that the $30,211.66 damage award is not excludable under section 104(a)(2). 4 Sec. 7491(a), concerning burden of proof, has no bearing on the underlying substantive issue.Page: Previous 1 2 3 4 5 6 7 8 9 Next
Last modified: May 25, 2011