Sandra G. Venable - Page 1

          T.C. Memo. 2003-240                                                         

                               UNITED STATES TAX COURT                                

                          SANDRA G. VENABLE, Petitioner v.                            
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

               Docket No. 10888-02.          Filed August 13, 2003.                   

                    On Aug. 26, 1994, P filed a malicious prosecution                 
               lawsuit in Texas against a former business associate.                  
               After trial to a jury, P was awarded a favorable                       
               verdict and judgment in August of 1996.  A State                       
               appellate court affirmed, and the Texas Supreme Court                  
               denied review in 1998.  The former business associate                  
               then satisfied the judgment by means of a check dated                  
               Oct. 29, 1998.                                                         
                    Held:  Sec. 104, I.R.C., as amended by the Small                  
               Business Job Protection Act of 1996, Pub. L. 104-188,                  
               sec. 1605, 110 Stat. 1838, is applicable to determine                  
               excludability from gross income of the damages P                       
                    Held, further, the payment P received pursuant to                 
               the malicious prosecution lawsuit is not excludable                    
               from gross income for 1998 under sec. 104, I.R.C.                      
               There is no evidence that any of the judgment award was                
               received on account of a personal physical injury or                   
               physical sickness as required by sec. 104(a)(2),                       

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