Jesse and Tawara Goode - Page 9

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          surrounding the litigation, the allegations contained in the                
          complaint, and the course of the settlement negotiations between            
          the parties.  Robinson v. Commissioner, supra at 127-128.                   
               Express allocations in a settlement, identifying payment               
          amounts deemed eligible for the section 104(a)(2) exclusion, are            
          generally accorded conclusive effect for tax purposes.  Fono v.             
          Commissioner, 79 T.C. 680, 693-694 (1982), affd. without                    
          published opinion 749 F.2d 37 (9th Cir. 1984).  However, the                
          statutory proviso contained in the penultimate sentence of                  
          section 104(a) dictates one exception to this principle of                  
          judicial deference to manifest allocations.  The penultimate                
          sentence of section 104(a) provides: “For purposes of paragraph             
          (2), emotional distress shall not be treated as a physical injury           
          or physical sickness.”                                                      
               As elucidated in the legislative history of the SBJPA                  
          amendment, “emotional distress” denotes “symptoms (e.g.,                    
          insomnia, headaches, stomach disorders) which may result from               
          such emotional distress.”  H. Conf. Rept. 104-737, at 301 n.56              
          (1996), 1996-3 C.B. 741, 1041 n.56.  To ascertain whether                   
          settlement proceeds fall within the section 104(a)(2) “physical             
          injuries or physical sickness” rubric--as opposed to ineligible             
          payments stemming from physical manifestations of emotional                 
          distress--the caselaw surveys the circumstances surrounding the             
          origin of the injury redressed in the settlement for a sufficient           






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