Cite as: 515 U. S. 323 (1995)
O'Connor, J., dissenting
two independent requirements that a taxpayer must meet before a recovery may be excluded under § 104(a)(2). First, the taxpayer must demonstrate that the underlying cause of action giving rise to the recovery is "based upon tort or tort type rights"; and second, the taxpayer must show that the damages were received "on account of personal injuries or sickness." For the reasons discussed above, we believe that respondent has failed to satisfy either requirement, and thus no part of his settlement is excludable under § 104(a)(2).
The judgment is reversed.
It is so ordered.
Justice Scalia concurs in the judgment.
Justice O'Connor, with whom Justice Thomas joins, and with whom Justice Souter joins with respect to Part II, dissenting.
Age discrimination inflicts a personal injury. Even under the principles set forth in United States v. Burke, 504 U. S. 229 (1992), the damages received from a claim of such discrimination under the Age Discrimination in Employment Act of 1967 (ADEA) are received "on account of" that personal injury and therefore excludable from taxable income under 26 U. S. C. § 104(a)(2). Unless the Court reads § 104(a)(2) to permit exclusion only of damages received for tangible injuries (i. e., physical and mental injuries)—a reading rejected by eight Members of the Court in Burke and contradicted by an agency's reasonable interpretation of the statute it administers—the inescapable conclusion is that ADEA damages awards, are excludable.
I
It is not disputed that the damages received by respondents constitute gross income under 26 U. S. C. § 61(a) unless excluded elsewhere; the question is whether such damages fall within § 104(a)(2), which excludes from taxable income
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