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deficiency relating to 2003. Respondent determined that
petitioner failed to report the settlement award and was liable
for a section 6662(a) accuracy-related penalty. On April 5,
2006, petitioner, while residing in Boynton Beach, Florida, filed
his petition with the Court.
Discussion
Petitioner contends that the settlement award he received
was compensation for personal injuries and, pursuant to section
104(a)(2), is excludable from gross income. Respondent contends
that the settlement award should have been included in
petitioner’s gross income.
Section 104(a)(2) provides that gross income does not
include “the amount of any damages * * * received (whether by
suit or agreement and whether as lump sums or as periodic
payments) on account of personal physical injuries or physical
sickness”. Thus, an amount may be excluded from gross income
only when it was received both: (1) Through prosecution or
settlement of an action based upon tort or tort type rights, and
(2) on account of personal injuries or sickness. See
Commissioner v. Schleier, 515 U.S. 323, 336-337 (1995); sec.
1.104-1(c), Income Tax Regs.
Petitioner contends that his settlement award meets the
requirements of section 104(a)(2). Petitioner, however, did not
incur any medical expenses, consult with a medical professional,
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