- 2 -
excludable from income under section 104(a)(2), as petitioners
contend, or is interest includable in income under section
61(a)(4), as respondent contends. We hold that it is interest.
Unless otherwise specified, section references are to the
Internal Revenue Code in effect for 1994, and Rule references are
to the Tax Court Rules of Practice and Procedure.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
Petitioners resided in Slidell, Louisiana, when they filed the
petition.
A. The Lawsuits
1. The First $100,000 of Damages
On June 5, 1985, petitioners filed a medical malpractice
lawsuit against Pendleton Memorial Methodist Hospital, et al.
(Pendleton Hospital), in the Civil District Court for the Parish
of New Orleans, Louisiana (State court). Louisiana law limits
the liability of qualified health care providers for malpractice
claims to $100,000, plus interest. La. Rev. Stat. Ann. sec.
40:1299.42(B)(2) (West 2001). In April 1992, petitioners settled
their claim against Pendleton Hospital for $75,000. This ended
the hospital’s liability for the first $100,000 under the
Louisiana Medical Malpractice Act.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011