-15- agreement from which we cannot clearly discern why the payments were made, the underlying complaint is normally examined as an indicator of the payor’s intent). Petitioner alleges in his complaint that his civil rights were violated because his procedural and substantive due process rights were infringed. In essence, he claims his due process rights were violated through judicial misconduct done in furtherance of Nevada’s “good ole boy” network. Although the complaint also includes general allegations that he suffered emotional and physical damage as a result of the alleged violations and seeks compensatory and punitive damages, it contains no specific allegations of personal physical injury or physical sickness.10 Neither the settlement agreement nor the complaint establishes that the bank made any portion of the settlement payment to petitioner on account of a personal physical injury or physical sickness. The agreement and complaint only indicate that the bank made the payment on account of civil rights violations and for a general release from all of petitioner’s claims. 10The mere mention of “personal physical injury” in a complaint does not, by itself, serve to exclude the recovery from gross income under sec. 104(a)(2) because the “personal physical injury” language could easily be included in every complaint, even if such claim were only a “throwaway” claim. See Kightlinger v. Commissioner, T.C. Memo. 1998-357.Page: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Next
Last modified: May 25, 2011