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Respondent attempts to distinguish Bent from the present
case, arguing in part that Schleier stands for the proposition
that damages received for economic injury do not qualify for the
section 104(a)(2) exclusion, and that this Court’s holding in
Bent that lost wages may be a measure of personal injury “has
clearly lost its vitality” following Schleier. We agree with
respondent insofar as damages received on account of economic
injury are not excludable under section 104(a)(2) pursuant to
Schleier. Quantum Company Trust v. Commissioner, T.C. Memo.
2000-149.
Respondent bears the burden of proof with respect to this
issue because it was raised by respondent for the first time in
his answer. Rule 142(a).
In the case at hand, neither party has attempted to break
down the $185,000 in damages into portions attributable to the
various categories of damages sought by petitioner in his
lawsuit. We therefore examine each category of damages sought
therein.
First, petitioner sought punitive damages of $500,000. Any
portion of the amounts awarded to petitioner which represent
punitive damages is not excludable from income under section
104(a)(2). O’Gilvie v. United States, supra.
Second, petitioner sought compensatory damages of $250,000.
We are convinced that these damages sought by petitioner were for
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