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show that the damages were received ‘on account of personal
injuries or sickness.’” Commissioner v. Schleier, supra at 337;
see also Hemelt v. United States, 122 F.3d 204, 208 (4th Cir.
1997) (quoting above passage from Schleier as the “basic test
* * * for determining whether an award may fairly be
characterized as personal injury damages” that fall within the
section 104(a)(2) exclusion).5
In the instant case, petitioners make a series of arguments
to support their assertion that the backpay and interest on the
backpay awarded by the MSPB are really an award of damages for a
personal injury suffered by Mrs. Campbell as a result of her
“unlawful demotion”. Primarily, they argue that, based on United
States v. Burke, 504 U.S. 229 (1992), when damages are awarded, a
taxpayer need only prove that the underlying claim was based on
“tort or tort type rights” for the damages to be excludable under
section 104(a)(2). In such a case, according to petitioners,
there is no need for a discussion of whether the requirements of
personal injury were met. Because Mrs. Campbell’s “unlawful
demotion” was a tort, which petitioners alternatively
characterize as a “workplace”, an “abuse of process”, and a
5 Interest received on damage awards must be included in
gross income under sec. 61, even under circumstances in which the
underlying damages are excludable under sec. 104(a)(2). Rozpad
v. Commissioner, 154 F.3d 1 (1st Cir. 1998), affg. T.C. Memo.
1997-528; Brabson v. United States, 73 F.3d 1040 (10th Cir.
1996); Kovacs v. Commissioner, 100 T.C. 124 (1993), affd. without
published opinion 25 F.3d 1048 (6th Cir. 1994).
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