-19-
find section 104(a)(2) unconstitutional. See Cottrell v.
Commissioner, T.C. Memo. 1970-218.
b. Capital Investment
Petitioner argues that the settlement proceeds are “not only
for ‘personal physical injury’” but are also a nontaxable return
on capital because they are allocable to the loss of his license
as the source of his business and to the loss of goodwill he
generated in being known for his honesty and trustworthiness.
See, e.g., OKC Corp. & Subs. v. Commissioner, 82 T.C. 638, 650
(1984) (settlement proceeds may be received as a replacement for
capital destroyed or for the sale or exchange of a capital asset
so that they are treated as a nontaxable return of capital or a
taxable capital gain, respectively).
The record contains no credible evidence that the bank made
any portion of the settlement payment for petitioner’s alleged
loss of license or goodwill, and petitioner has otherwise failed
to show that the settlement proceeds, in whole or in part, are
attributable to the damage of any capital asset. Consequently,
we reject petitioner’s argument.
B. Attorney’s Fees and Costs
1. Commissioner v. Banks
In Commissioner v. Banks, 543 U.S. ___, 125 S. Ct. 826
(2005), the U.S. Supreme Court addressed whether the portion of a
money judgment or settlement paid to a plaintiff’s attorney under
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