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he made claim or for which he was compensated by NGC. What
petitioner did suffer–-fatigability, occasional indigestion, and
difficulty sleeping–-are the types of injuries or sicknesses that
Congress intended to be encompassed within the definition of
emotional distress. See H. Conf. Rept. 104-737, at 301 n.56,
supra, 1996-3 C.B. at 1041 n.56. Consequently, amounts received
on the basis of such injuries are not excludable from gross
income under section 104(a)(2) even if the underlying cause of
action sounds in tort.
Even if petitioner had suffered a personal physical injury
within the meaning of section 104(a)(2), such injury could not
have been the basis for settlement because, as the parties
stipulated, petitioner did not communicate any physical injury to
representatives of NGC during the settlement negotiations.
Clearly he did not make a claim for medical expenses that had
been incurred as a result of his injury. Petitioners
nevertheless argue that, even though petitioner’s injury
(presumably the hypertension) was not disclosed to NGC during the
settlement negotiations, “this in no way lessens its existence or
the extent of such injury.” Respondent does not dispute the
symptoms described by petitioner. The key, however, is not
simply whether petitioner suffered an injury, but whether that
injury was the basis for any portion of the settlement. In this
case, NGC was unaware that petitioner was suffering from any
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Last modified: May 25, 2011