§1605

Personal injuries are distinguished from “legal injuries of an economic character” such as those arising out of the unlawful deprivation of full wages earned for services performed or the unlawful deprivation of the opportunity to earn wages through wrongful termination. Id. at 239. 1 The Small Business Job Protection Act of 1996, Pub. L. 104-188, sec. 1605(a), 110 Stat.

), affg. T.C. Memo. 1997-528; Brabson v. United States, 73 2 Petitioners do not contend that respondent bears the burden of proving that sec. 104(a)(2) does not apply. Rule 142(a)(1). 3 The Small Business Job Protection Act of 1996, Pub. L. 104-188, sec. 1605(a), 110 Stat. 1838, amended sec. 104(a)(2) to limit the exclusion to amounts received for personal physical injuries or physical sickness. The amount at issue in this case was received before the effective date of the amendment, and, thus,

laims must be bona fide but need not be valid or sustainable. See Mayberry v. United States, supra at 859 n.3; Taggi v. United States, 35 F.3d 93, 96 (2d Cir. 1994); Robinson 5 The Small Business Job Protection Act of 1996 (SBJPA), Pub. L. 104-188, sec. 1605, 110 Stat. 1838, amended sec. 104(a)(2) by limiting the exclusion from gross income to, inter alia, damages received “on account of personal physical injuries or physical sickness.” This amendment, however, does not apply to amounts received

laims for intentional and negligent infliction of emotional distress involve tort rights.17 Petitioners argue that the personal injuries in this case include emotional distress. The Small Business Job Protection Act of 1996 (SBJPA), Pub. L. 104-188, sec. 1605(a), 110 Stat. 1838, amended section 104(a)(2) to limit the exclusion to amounts received for personal physical injuries or physical sickness. However, that amendment does not apply to any amount received under a written binding agreement in

s lump sums or as periodic payments) on account of personal injuries or sickness”.4 The relevant regulation, sec. 1.104- 1(c), Income Tax Regs., provides in pertinent part as follows: 4 The Small Business Job Protection Act of 1996, Pub. L. 104-188, sec. 1605(a), 110 Stat. 1755, 1838, amended sec. 104(a)(2) to narrow the exclusion for personal injury damages received pursuant to a judgment or a settlement after Aug. 20, 1996, for taxable years ending after such date. As such, under the amendment

and not its validity controls whether such amounts are excludable from gross income under section 104(a)(2). See Seay v. Commissioner, 58 T.C. 32, 37 (1972). “[T]he critical question 7The Small Business Job Protection Act of 1996, Pub. L. 104- 188, sec. 1605(a), 110 Stat. 1838, amended sec. 104(a)(2) to limit the exclusion, inter alia, to “personal physical injuries or physical sickness.” The amendment does not apply to damages collected before the date of its enactment and has no bearing here.

, 87 T.C. 1294, 1297 (1986), affd. 848 F.2d 81 (6th Cir. 1988); Bent v. Commissioner, 87 T.C. 236, 244 (1986), affd. 835 F.2d 67 (3d Cir. 1987); Seay v. Commissioner, 58 T.C. 32, 36- 5The Small Business Job Protection Act of 1996, Pub. L. 104- 188, sec. 1605(a), 110 Stat. 1755, 1838, amended sec. 104(a)(2) to narrow the exclusion for personal injury damages received after Aug. 20, 1996, in tax years ending after that date. Under the amendment, personal injury or sickness must be physical. The am

to get any credit for the taxes previously paid. 13Petitioner seems to be arguing that the backpay was really a damage award and thus under sec. 104(a) is excluded from gross income. 14The Small Business Job Protection Act of 1996, Pub. L. 104-188, sec. 1605(a), 110 Stat. 1838, amended sec. 104(a)(2) to limit the exclusion, inter alia, to “personal physical injuries or physical sickness.” The amendment does not apply to damages collected before the date of its enactment and has no bearing here.

In order for damages to be excludable from gross income under section 104(a)(2), the taxpayer must demonstrate that: (1) The underlying cause of action is based upon tort or tort type 3The Small Business Job Protection Act of 1996, Pub. L. 104- 188, sec. 1605(a), 110 Stat. 1838, amended sec. 104(a)(2) to limit the exclusion, inter alia, to "personal physical injuries or physical sickness". The amendment does not apply to damages collected before the date of its enactment and has no bearing here.

e.g., Threlkeld v. Commissioner, 87 T.C. 1294, 1308 (1986), affd. 848 F.2d 81 (6th Cir. 1988). In evaluating whether amounts received pursuant to a 10 Congress amended sec. 104(a)(2) in The Small Business Job Protection Act of 1996, Pub. L. 104-188, sec. 1605(a), 110 Stat. 1755, 1838, by limiting the exclusion, inter alia, to “personal physical injuries or physical sickness”. The amendment does not apply to the year before us and has no bearing on the instant case. - 16 - settlement agreement ar

gress limited sec. 104(a)(2) to damages received on account of a personal “physical” injury or “physical” sickness, effective generally with respect to amounts received after June 30, 1996. Small Business Job Protection Act of 1996, Pub. L. 104-188, sec. 1605, 110 Stat. 1838. Because of the prospective effective date, this amendment does not apply to the case at hand. The conference report indicates that no inference was intended as to the application of sec. 104(a)(2) prior to June 30, 1996, in

d the Texas Supreme Court denied review in 1998. The former business associate then satisfied the judgment by means of a check dated Oct. 29, 1998. Held: Sec. 104, I.R.C., as amended by the Small Business Job Protection Act of 1996, Pub. L. 104-188, sec. 1605, 110 Stat. 1838, is applicable to determine excludability from gross income of the damages P received. Held, further, the payment P received pursuant to the malicious prosecution lawsuit is not excludable from gross income for 1998 under se

104-188, § 1605(b), 110 Stat.

104-188, § 1605(a), 110 Stat.

104-188, § 1605(b), 110 Stat.

des symptoms caused by stress such as "insomnia, headaches, and stomach disorders". Id. at *3 (citing H.R. Conf. Rept. No. 104-737, at 301 n.56 (1996), 1996-3 C.B. 741, 1041 n.56). 7The Small Business Job Protection Act of 1996, Pub. L. No. 104-188, sec. 1605(a), 110 Stat. at 1838, amended sec. 104(a)(2) to limit the exclusion, inter alia, to "personal physical injuries or physical sickness". 9 When damages are received pursuant to a settlement agreement, the nature ofthe claim that was the basi

04-1(c), Income Tax Regs. (before amendment by T.D. 9573, 2012-12 I.R.B. 498). In 2012 the Secretary amended the regulations 3 Pursuant to an amendment to sec. 104(a)(2) included in the Small Business Job Protection Act of 1996, Pub. L. No. 104-188, sec. 1605, 110 Stat. at 1838, the second prong ofthe test in Commissioner v. Schleier, 515 U.S. 323 (1995), further requires a taxpayerto prove that the damages were received on account ofpersonal physical injuries or physical illness. See Lindsey v.

account of personal physical injuries or physical sickness. 6 After Schleier, Congress amended section 104 to limit the exclusion to "personalphysical injuries orphysical sickness." See Small Business Job Protection Act of 1996, Pub. L. No. 104-188, sec. 1605(a), 110 Stat. at 1838 (emphasis added). - 13 - B. Damages Requirement The regulations define the term "damages" as "an amount received (other than workers' compensation) through prosecution ofa legal suit or action, or through a settlement

oner, 4 In 1996 Congress amended sec. 104(a)(2) by adding the requirementthat any amount received must be on account ofpersonal injuries that are physical or sickness that is physical. Small Business Job Protection Act of 1996, Pub. L. No. 104-188, sec. 1605, 110 Stat. at 1838. 5 The new regulations may be applied retroactively at the desire ofthe taxpayer. Sec. 1.104-1(c)(3), Income Tax Regs. The new regulations are favorable to petitioner; therefore, the Court applies the regulations retroacti

741, 1041, states that "[t]he House bill also specifically provides that emotional distress is not considered a physical injury or physical sickness." Respondent contends that petitioner wife did not satisfy section 104(a)(2) because the settlementpayments she received were not on account ofpersonal physical injuries or physical sickness.4 The taxpayer is required to pr

(2) to 9In 199Ó COngress amended sec. 104(a)(2) by adding the requirement that any amount received must be on account ofpersonal injuries that are physical or sickness that is physical. Small Business Job Protection Act of 1996, Pub. L. No. 104-188, sec. 1605, 110 Stat. at 1838. -24- traditional tort principles".1° Burke, 504 U.S. at 234; see also T.D. 6500, 25 Fed. Reg. 11402, 11490 (Nov. 26, 1960). Fifteen years after Congress amended section 104(a)(2) in 1996 to state that the section applies

96, by adding the requirement that, in order to be excluded from gross income, any amount received must be on account ofpersonal injuries that are physical or sickness that is physical. Small Business Job Protection Act of 1996, Pub. L. No. 104-188, sec. 1605, 110 Stat. at 1838. The 1996 amendment does not otherwise change the requirements ofsec. 104(a)(2) or the analysis set forth in Schleier; it imposes an additional requirement in order for an amount to qualify for exclusion from gross income

oner failed to prove that she received the settlement proceeds on account ofphysical injury or physical sickness. 9The Supreme Court analyzed sec. 104(a)(2) before its amendment by the Small Business Job Protection Act of 1996, Pub. L. No. 104-188, sec. 1605(a), 110 Stat. at 1838, when the restrictive modifier "physical" was added to limit the scope of"personal injuries." Commissioner v. Schleier, 515 U.S. 323, 328 n.3 (1995). - 11 - [*11] Petitioner has failed to prove th t the university paid

punitive damages) received (whether by suit or agreement and whether as lump sums or as periodic payments) on account ofpersonal physical injuries or physical sickness".16 16The Small Business Job Protection Act of 1996 (SBJPA), Pub. L. No. 104-188, sec. 1605, 110 Stat. at 1838, amended sec. 104(a)(2) to narrowthe exclusion for damages received for personal injuries or sickness to damages for personal injury or sickness that is physical, effective for amounts received after August 20, 1996. See

2) the damages were received on account ofpersonal injuries or sickness. See Commissioner v. Schleier, 515 U.S. at 336-337. Pursuant to an amendment to section 104(a)(2) included in the Small Business Job Protection Act of 1996, Pub. L. No. 104-188, sec. 1605, 110 Stat. at 1838, the second prong ofthe Schleiertest now requires a taxpayerto prove that the damages were received on account of personal physical injuries or physical illness. See Lindsey v. Commissioner, 422 F.3d 684, 688 (8th Cir. 20

104 (a) provides that emotional distress is not to be treated as a physical injury or physical sickness for purposes of sec.

1605.13(d) (2008)." During the 90-day period a participant may also elect "to reinstate a loan which was previously declared to be a taxable distribution." 5 C.F.R. sec. 1605.13(e) (2008). The regulations do not require the TSP to automatically restore the participant's loan but instead require the participant to take action to "If a participa

cal injury or physical sickness, or (2) except to the extent the damages do not exceed amounts paid'for medical care attributable to.emotional distress. See .sec. 104 (a) (flush language); Small Business Job Protection Act of 1996, Pub. L. 104-188, sec. 1605, 110 Stat. 1755, 1838; see also Lindsey v. Commissioner, 422 F.3d 684, 687-688 (8th Cir. 2005), affg. T..C. Memo. 2004-113; Mayberry v. United States,.151 F.3d 855, 858 n.2 (8th Cir. 1998).' When damages are received pursuantj to a settlemen

ing punitive damages. O'Gilvie v. United States, supra at 89-90. Congress further amended the statute, effective August 20, 1996, specifically excepting punitive damages from the exclusion. Small Business Job Protection Act of 1996, Pub. L. 104-188, sec. 1605, 110 Stat. 1838. Petitioners contend that Congress must have intended section 104(a) (3) to encompass punitive damages because it failed to amend that section when it amended section 104(a) (2). - 7 - Petitioners, however, offer no evidence

n based upon tort or tort type rights, or through a settlement agreement entered into in lieu of such prosecution.” Sec. 1.104-1(c), Income Tax Regs. 3The 1996 amendments to sec. 104 by the Small Business Job Protection Act of 1996, Pub. L. 104-188, sec. 1605, 110 Stat. 1838, do not apply because the amendments are effective for amounts received after Aug. 20, 1996. - 9 - In Commissioner v. Schleier, supra, the U.S. Supreme Court established a two-prong test for determining whether a taxpayer is

. Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 429-431 (1955). Exclusions from gross income are construed narrowly. Commissioner v. Schleier, 515 U.S. 323, 327-328 (1995). The Small Business Job Protection Act of 1996 (SBJPA), Pub. L. 104-188, sec. 1605, 110 Stat. 1838, amended section 104, as relevant here, to provide: SEC. 104. COMPENSATION FOR INJURIES OR SICKNESS. (a) In General.--Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 213

1995), Congress amended sec. 104(a) to provide that amounts are excludable only if received “on account of personal physical injuries or physical sickness”. Sec. 104(a)(2) (emphasis added); Small Business Job Protection Act of 1996, Pub. L. 104-188, sec. 1605, 110 Stat. 1838, effective for amounts received after Aug. 20, 1996. Although the amendment narrows the scope of sec. 104(a)(2), it does not otherwise affect the analysis set forth in Commissioner v. Schleier, supra. See Goode v. Commission

v. Schleier, supra at 337; sec. 1.104-1(c), Income Tax Regs. This reformulation of the two-part test set forth in Schleier incorporates the amendment to section 104(a) (2) pursuant to the Small Business Job Protection Act of 1996, Pub. L. 104-188, sec. 1605, 110 Stat. 1838, (the SBJPA amendment), narrowing the exclusion formerly_._ applying to personal injury damages to those that are physical in nature. Besides the imposition of this additional prerequisite into the second prong, the applicabl

ent Agreement Section 61(a) includes in gross income “all income from whatever source derived”, unless otherwise provided. Section 104(a)(2) provides otherwise. Before it was amended by the Small Business Job Protection Act of 1996, Pub. L. 104-188, sec. 1605, - 20 - 110 Stat. 1838, section 104(a)(2) excluded from gross income amounts received on account of personal injuries or sickness. While the reference to personal injuries or sickness did not include damages received pursuant to the settlem

asil v. Commissioner, T.C. Memo. 2003-100. In the context of section 104(a)(2), the terms “physical injury” and “physical sickness” do not include emotional distress, except to 9The Small Business Job Protection Act of 1996 (SBJPA), Pub. L. 104-188, sec. 1605, 110 Stat. 1838, amended sec. 104(a)(2) to narrow the exclusion for damages received for personal injuries or sickness to damages for personal injury or sickness that is physical in nature, effective for amounts received after Aug. 20, 1996

ses for depression or any related medical expenses, and so we have no basis on which to allocate any part of the $25,000 to those costs. 3 Sec. 104(a)(2) was amended in 1996 by the Small Business Job Protection Act of 1996 (SBJPA), Pub. L. 104-188, sec. 1605(a), 110 Stat. 1838, effective generally for amounts received after Aug. 20, 1996. In relevant part, the amendment added the modifier “physical” after “personal” and before “injuries” and the modifier “physical” was added before “sickness”. T

ormation, documents, meetings, and interviews”. Petitioner has not produced evidence to establish that any of these requirements are met. 4 We apply sec. 104(a)(2) as amended in 1996 by the Small Business Job Protection Act of 1996, Pub. L. 104-188, sec. 1605(a), 110 Stat. 1838, effective generally for amounts received after Aug. 20, 1996. That amendment, in relevant part, added the modifier “physical” after “personal” and before “injuries”, to clarify that amounts received on account of persona

, supra at 235 n.6, mental pain and suffering, see Bent v. Commissioner, 835 F.2d 67, 70 (3d Cir. 1987), affg. 87 T.C. 236 (1986), and injury to 30 Sec. 104(a)(2) was amended in 1996 by the Small Business Job Protection Act of 1996, Pub. L. 104-188, sec. 1605(a), 110 Stat. 1838, effective generally for amounts received after Aug. 20, 1996. In relevant part, the amendment added the modifier “physical” after “personal” and before “injuries”. This amendment was made to clarify that amounts received

owly. Commissioner v. Schleier, supra at 328; United States v. Burke, 504 U.S. 229, 248 (1992) (Souter, J., concurring in judgment). Before its amendment on August 20, 1996, by the Small Business Job Protection Act of 1996 (SBJPA), Pub. L. 104-188, sec. 1605, 110 Stat. 1838, section 104 read in pertinent part as follows (pre-SBJPA section 104): SEC. 104. COMPENSATION FOR INJURIES OR SICKNESS. (a) In General.--Except in the case of amounts attributable to (and not in excess of) deductions allowed

police officers and firefighters for purposes of sec. 104(a)(1)) (amended by Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. 105-206, sec. 6015(c)(1), 112 Stat. 821); Small Business Job Protection Act of 1996, Pub. L. 104-188, sec. 1605(a), 110 Stat. 1838 (restricting sec. 104(a)(2) to personal physical injuries and sickness); Omnibus Budget Reconciliation Act of 1989, Pub. L. 101-239, sec. 7641(a), 103 Stat. 2379 (making sec. 104(a)(2) inapplicable with respect to punitiv

strued narrowly. Commissioner v. Schleier, supra at 328; United States v. Burke, 504 U.S. 229, 248 (1992) (Souter, J., concurring in judgment). As amended on August 20, 1996, by the Small Business Job Protection Act of 1996 (SBJPA), Pub. L. 104-188, sec. 1605, 110 Stat. 1838, and as applicable to this case, section 104 reads in pertinent part as follows: SEC. 104. COMPENSATION FOR INJURIES OR SICKNESS. (a) In General.--Except in the case of amounts attributable to (and not in excess of) deductio

996, by adding the requirement that, in order to be excluded from gross income, any amounts received must be on account of personal injuries that are physical or sickness that is physical.5 Small Business Job Protection Act of 1996, Pub. L. 104-188, sec. 1605, 110 Stat. 1755, 1838-1839. The 1996 amendment does not otherwise change the requirements of section 104(a)(2) or the analysis set forth in Commissioner v. Schleier, supra; it imposes an additional requirement for an amount to qualify as an

tute Section 61(a) includes in gross income “all income from whatever source derived” unless otherwise provided. Section 104(a)(2) provides otherwise. Before it was amended by the Small Business Job Protection Act of 1996 (SBJPA), Pub. L. 104-188, sec. 1605, 110 Stat. 1838, section 104(a)(2) excluded from gross income amounts received on account of personal injuries or sickness. While the reference to personal injuries or sickness did not include damages received pursuant to the settlement of pu

amount of any damages received (whether by 6 No question has been raised with respect to the burden of proof or production under sec. 7491(a). 7 The 1996 amendments added to sec. 104 by the Small Business Job Protection Act of 1996, Pub. L. 104-188, sec. 1605(a), 110 Stat. 1838, do not apply because the amendments are effective for amounts received after Aug. 20, 1996. - 16 - suit or agreement and whether as lump sums or as periodic payments) on account of personal injuries or sickness; The regu

its she was receiving at the time of the agreement and even at the time of trial. Petitioners argue that, because Standard Form 50 is attached to the mediation agreement, the language in 4 Small Business Job Protection Act of 1996, Pub. L. 104- 188, sec. 1605, 110 Stat. 1838, effective for amounts received after Aug. 20, 1996. - 10 - SF 50 is part and parcel of the mediation agreement and, therefore, establishes that the $60,000 represented payment for personal physical injuries.5 The Court reje

rt or tort type rights, and second that the payment was received on account of 5Petitioner’s complaint raised intentional infliction of emotional distress as a cause of action. However, the Small Business Job Protection Act of 1996, Pub. L. 104-188, sec. 1605, 110 Stat. 1838 (the 1996 amendment), amended sec. 104(a)(2) to narrow the exclusion for personal injury damages received pursuant to a judgment or settlement, effective for amounts received after Aug. 20, 1996. Under the 1996 amendment, pe

secution.” Sec. 1.104-1(c), Income Tax Regs. Section 104(a) further provides that “emotional distress shall 3 Petitioner does not contend that sec. 7491(a) is applicable to this case. 4 The Small Business Job Protection Act of 1996, Pub. L. 104-188, sec. 1605, 110 Stat. 1838 (1996 amendment), amended sec. 104(a)(2) to narrow the exclusion for personal injury damages received pursuant to a judgment or settlement, effective for amounts received after Aug. 20, 1996. Under the 1996 amendment, person

d. 259 F.3d 881 (7th Cir. 2001). Petitioner has never alleged, much less proven, that the cost incurred in obtaining the $20,000 payment, taken in combination with other allowable deductions, exceeds the amount of his standard deduction. - 5 - 188, sec. 1605, 110 Stat. 1755, 1838-1839, is unconstitutional. Prior to its amendment in 1996, section 104(a)(2) served to exclude from gross income “the amount of any damages received (whether by suit or agreement and whether as lump sums or as periodic

r. To the extent, however, that petitioners contend that they should not be bound by the stipulation of facts,3 even if they had not entered into the stipulation, the result is the same. 2 Small Business Job Protection Act of 1996, Pub. L. 104- 188, sec. 1605, 110 Stat. 1838, effective for amounts received after Aug. 20, 1996. 3 In their posttrial memorandum, petitioners suggest that they were unduly pressured into signing the stipulation of facts. For the reasons stated above, we do not find it

. 104-737, at 301 n.56 (1996), 1996-3 C.B. 741, 1041 n.56. Generally, damages are excludable from gross income if they satisfy two requirements.¹° The Supreme Court in Commissioner v. 9 The Small Business Job Protection Act of 1996, Pub. L. 104-188, sec. 1605, 110 Stat. 1838 (1996 amendment), amended sec. 104(a)(2) to narrow the exclusion for personal injury damages received pursuant to a judgment or settlement, effective for amounts received after Aug. 20, 1996. Under the 1996 amendment, person

996, by adding the requirement that, in order to be excluded from gross income, any amounts received must be on account of personal injuries that are physical or sickness that is physical.4 Small Business Job Protection Act of 1996, Pub. L. 104-188, sec. 1605, 110 Stat. 1755, 1838-1839. The 1996 amendment does not otherwise change the requirements of section 104(a)(2) or the analysis set forth in Commissioner v. Schleier, supra; it imposes an additional requirement for an amount to qualify for e

ghts and (2) the payment was received on account of personal physical injuries or physical sickness. Commissioner v. Schleier, supra at 328;3 see also sec. 3 As relevant herein, the Small Business Job Protection Act of 1996 (SBJPA), Pub. L. 104-188, sec. 1605, 110 Stat. 1838, amended sec. 104(a)(2) to narrow the exclusion for amounts received after Aug. 20, 1996. Whereas the text of the predecessor section allowed an exclusion for damages received “on account of personal injuries or sickness”, t

sed upon tort or tort type rights”; and second, the taxpayer must show that the damages were received “on account of personal injuries or sickness.” * * * 1Sec. 104(a)(2) was amended by the Small Business Job Protection Act of 1996, Pub. L. 104-188, sec. 1605, 110 Stat. 1755, 1838. We apply the statute as it was in effect prior to amendment because the payments in this case were received pursuant to a court decree issued before September 13, 1995. Id. sec. 1605(d)(2), 110 Stat. 1838. - 6 - Id. a

did not cooperate with R. Accordingly, P bears the burden of proof. Sec. 7491(a), I.R.C.; Rule 142(a). Held, further, pursuant to sec. 104(a)(2), I.R.C., before its amendment by the Small Business Job Protection Act of 1996 (SBJPA), Pub. L. 104-188, sec. 1605, 110 Stat. 1838, the May 1996 payment is excludable from income for 1996. Held, further, pursuant to sec. 104(a)(2), I.R.C., as amended by the SBJPA, P is not entitled to an overpayment for 1996, and the May 1997 payment and the November 19

amount of any damages received (whether by 6 No question has been raised with respect to the burden of proof or production under sec. 7491(a). 7 The 1996 amendments added to sec. 104 by the Small Business Job Protection Act of 1996, Pub. L. 104-188, sec. 1605(a), 110 Stat. 1838, do not apply because the amendments are effective for amounts received after Aug. 20, 1996. - 16 - suit or agreement and whether as lump sums or as periodic payments) on account of personal injuries or sickness; The regu

adding the requirement that, - 12 - in order to be excluded from gross income, any amounts received must be on account of personal injuries that are physical or sickness that is physical. Small Business Job Protection Act of 1996, Pub. L. 104-188, sec. 1605, 110 Stat. 1755, 1838-1839. The 1996 amendment does not otherwise change the requirements of section 104(a)(2) or the analysis set forth in Commissioner v. Schleier, supra; it merely imposes an additional requirement for an amount to qualify

unitive damages) received (whether by suit or agreement) on account of personal physical injuries or physical sickness.1 “Damages received” is defined as 1 Sec. 104(a)(2) was amended by the Small Business Job Protection Act of 1996, Pub. L. 104-188, sec. 1605(a), 110 Stat. 1838, effective for amounts received after Aug. 20, 1996. When Congress amended sec. 104(a)(2), it further limited the exclusion from gross income for damages received because of a nonphysical injury. Because petitioner claims

payments, on account of personal physical injuries or physical sickness. Sec. 104(a)(2).4 For purposes of paragraph (2), emotional distress 4 Prior to the amendment of sec. 104(a)(2) by the Small Business Job Protection Act of 1996, Pub. L. 104-188, sec. 1605(a), 110 Stat. 1838-1839, effective for amounts received after Aug. 20, 1996, gross income did not include damages received on account of personal injuries or sickness. Personal injuries included nonphysical injuries. Commissioner v. Schleie

Jacobs v. Commissioner, supra. The only relief available under the FLSA is the payment of back wages and liquidated damages for excessive hours worked. See 29 U.S.C. 235 n.6 (1992). But see Small Business Job Protection Act of 1996, Pub. L. 104-188, sec. 1605(a), 110 Stat. 1838, which amended sec. 104(a)(2) to provide that for amounts received after Aug. 20, 1996, a “personal injury” is limited to a physical injury. On the other hand, an economic injury includes injuries such as those arising ou

f) deductions allowed under section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include-- * * * * * * * (2) the amount of any damages received (whether by suit or agreement and whether as lump sums or as periodic payments) on account of personal injuries or sickness; (Section 104(a)(2) was amended by section 1605(a) of the Small Business Job Protection Act of 1996, Pub.

hysical” injuries or sickness, and thus damages for emotional or psychological harms were eligible for exclusion thereunder. See Commissioner v. Schleier, 515 U.S. 323 (1995). As amended by the Small Business Protection Act of 1996, Pub. L. 104-188, sec. 1605(a), 110 Stat. 1755, 1838, current sec. 104(a)(2) limits the exclusion to damages “on account of personal physical injuries or physical sickness”. (Emphasis added.) - 22 - personal claim under the DTPA against Lindsey because the Lindsey too

The Act defines "commercial activity" as "either a regular course of commercial conduct or a particular commercial transaction or act", and states that the "commercial character of an activity shall be determined by reference to" its."nature", rather than its "purpose." 28 U.S.C. sec. 1603(d). In interpreting the meaning of the ter

The Act defines "commercial activity" as "either a regular course of commercial conduct or a particular commercial transaction or act", and states that the "commercial character of an activity shall be determined by reference to" its."nature", rather than its "purpose." 28 U.S.C. sec. 1603(d). In interpreting the meaning of the ter