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testified that “the whole basis of the lawsuit” was that he “felt
[he] was being discriminated because [he] was going to Gamblers
Anonymous.”
Finally, we note that Mr. Lockwood testified that the
settlement payment was made to compensate petitioner for “lost
time” and so that “Mr. Bothe [would] cease to be employed by [the
Meadowlands] in any capacity”. Mr. Lockwood further testified
that at no time during the settlement negotiations did petitioner
allege that he had suffered any physical injury or physical
sickness as a result of his employment by the Meadowlands, nor
was it the Meadowlands’ intention to compensate petitioner for
any physical injury or physical sickness.
Mr. Lockwood’s testimony on these points is corroborated by
a statement in the settlement agreement that provides that, for
income tax purposes, the amount to be paid to petitioner is “in
the nature of compensation”.
Based upon the foregoing, we conclude that petitioner did
not receive the settlement payment on account of any personal
physical injury or physical sickness as those terms are used in
section 104(a)(2). Accordingly, we need not address whether the
underlying cause of action giving rise to the settlement was
based upon tort or tort-type rights. See Commissioner v.
Schleier, 515 U.S. at 337.
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