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Petitioners request that the Court apply pre-SBJPA section
104. SBJPA section 1605(d)(1) provides that the amendments made
by SBJPA section 1605 shall apply to amounts received after the
date of the enactment of the SBJPA, i.e., August 20, 1996, in
taxable years ending after such date. SBJPA section 1605(d)(2)
provided an exception to this rule for amounts received under a
written binding agreement, court decree, or mediation award in
effect on (or issued on or before) September 13, 1995.
Accordingly, post-SBJPA section 104 applies to amounts received
after its effective date unless they come within that exception.
Here, a court decree was not issued until on or after
October 13, 1995, the date of the jury verdict. Petitioner’s
situation therefore fails to satisfy the requirements for relief
under SBJPA section 1605(d)(2). In that event, SBJPA section
1605(d)(1) unambiguously makes the section 104 amendments
applicable to the situation at hand. Therefore, petitioners may
not exclude any of the damages award from gross income as an
award for physical injury or physical sickness.
Merchants also paid award interest to petitioners. This
payment was for interest accrued on the Merchants award not on
account of physical injury or physical sickness. Accordingly,
petitioners cannot exclude the interest portion of the award from
gross income under section 104(a)(2). Aames v. Commissioner, 94
T.C. 189, 193 (1990).
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Last modified: May 25, 2011