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personal and professional reputation, see Threlkeld v.
Commissioner, 848 F.2d 81, 83-84 (6th Cir. 1988).
There is no distinction between damage to one’s personal
reputation and one’s business reputation. Threlkeld v.
Commissioner, 87 T.C. at 1305. Thus, had Mr. Bradley’s claim for
defamation, libel, intentional infliction of emotional distress,
and damage to his reputation been made, it would be a claim for
nonphysical personal injuries and would generally fall within the
ambit of personal injuries for purposes of section 104(a)(2).
V. Rationale of Settlement
Determining whether a settlement was entered into on account
of sickness or personal injuries requires an examination of the
settlement agreement language. Pipitone v. United States, 180
F.3d 859, 863 (7th Cir. 1999). In support of petitioners’
contention that the $12 million was paid on account of tort-type
personal injuries, several cases are cited. Reliance on them is
misplaced, however, since these cases only point out the nature
of the tort injury, without reference to the motivation behind
each settlement payment. It is not sufficient that a tort or
tort-type injury exists. See United States v. Burke, supra at
234-235; see also Threlkeld v. Commissioner, 87 T.C. at 1305. To
be exempt, the damages received must be in settlement of those
injuries. Sec. 1.104-1(c), Income Tax Regs; see also
Commissioner v. Schleier, 515 U.S. at 337.
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