-8-
A legal award may be excluded from income if two conditions
are met. Id. at 337. A legal award may be excluded if the
underlying cause of action is based upon tort or tort-type
rights, and if the proceeds were for damages received on account
of personal physical injury or physical sickness.7 Id.
Emotional distress is not a personal physical injury or physical
sickness. Sec. 104(a)(2) (flush language).
The parties agree that petitioner’s underlying cause of
action is based upon tort or tort-type rights. Accordingly, the
first condition is met. The parties dispute, however, whether
any portion of the economic or non-economic damages from the jury
award was for damages received on account of personal physical
injury or physical sickness.
Petitioner did not allege in the complaint against the
University that she suffered personal physical injury or physical
sickness as a result of its discrimination or retaliation, or
that she was entitled to recover any amount from the University
for any such personal physical injury or physical sickness. In
addition, the jury’s verdict did not contain any reference to
personal physical injury or physical sickness. The jury awarded
petitioner $1.5 million of economic damages to compensate her for
the loss of earnings, loss of employment, and loss of employment
7The Supreme Court in Commissioner v. Schleier, 515 U.S. 323
(1995), analyzed sec. 104(a)(2) before its amendment by the SBJPA
sec. 1605(a), when the restrictive modifier “physical” was added
to limit the scope of “personal injuries”.
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