Jesse and Tawara Goode - Page 10

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          nexus, or “direct causal link”, between the amount paid and the             
          asserted physical injury.  See Lindsey v. Commissioner, 422 F.3d            
          684, 688 (8th Cir. 2005) (“We agree with the Tax Court that these           
          health symptoms [i.e., fatigue, indigestion, insomnia, and                  
          incontinence] relate to emotional distress, and not to physical             
          sickness.”), affg. T.C. Memo. 2004-113; Banaitis v. Commissioner,           
          340 F.3d 1074, 1080 (9th Cir. 2003), affg. in part and revg. in             
          part on a different issue T.C. Memo. 2002-5; Allum v.                       
          Commissioner, T.C. Memo. 2005-177 (“The mere mention of ‘personal           
          physical injury’ in a complaint does not, by itself, serve to               
          exclude the recovery from gross income under section                        
          104(a)(2)”.).                                                               
               Judicial approbation of express settlement allocations for             
          Federal income tax purposes is also not warranted where                     
          circumstantial factors reveal that the designation of the                   
          settlement proceeds was not the result of adversarial, arm’s                
          length, and good faith negotiations, and is incongruous with the            
          “economic realities” of the taxpayer’s underlying claims.  See              
          Bagley v. Commissioner, supra at 406-410.                                   
               Notably, the final sentence of section 104(a) subsumes                 
          within the scope of the section 104(a)(2) exclusion settlement              











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