Commissioner

As of June 13, 1983, P had been employed for over 30 years by BBSC, and been a partner in BBMP, an Ohio general partnership composed of management personnel from BBSC since August 30, 1976. On June 13, 1983, P's employment with BBSC was terminated. P believed that his termination was in contravention of BBMP's partnership agreement, and BBSC and BBMP disagreed. In order to resolve this dispute, on August 12, 1983, P, BBSC, and BBMP entered into a settlement agreement. Pursuant to the settlement agreement, P agreed among other things not to compete with BBSC for a period of two years, and in return BBSC agreed to make severance payments to P for two years. Additionally, the agreement provided that P's interest in BBMP would be liquidated through a series of three annual payments in the amount of $ 125,000 each. P attempted to establish a self-employed qualified retirement plan under sec. 401(a), I.R.C., and contributed to this plan the third installment payment in the amount of $ 125,000 that he had received from BBMP in 1986 in liquidation of his interest in the partnership. R determined that P did not meet the requirement of being an employer within the meaning of sec. 401(c)(4), I.R.C., and that P's retirement plan was not a qualified retirement plan under sec. 401(a), I.R.C. P alleges that subsequent to his termination from BBSC and BBMP, he engaged in a noncompeting beverage distributorship. The record reflects no contributions to the Plan with respect to earned income from any beverage distributorship operated by P. Held: It is appropriate to look to secs. 708, and 736, I.R.C., to determine when a partnership interest terminates for purposes of sec. 401, I.R.C. Consequently, pursuant to sec. 1.736-1(a)(6), Income Tax Regs., P was considered a partner in BBMP until he received the final payment in liquidation of his interest in the partnership. Therefore, BBMP, and not P, was P's employer within the meaning of sec. 401(c), I.R.C., and the plan was accordi

Held: An amount received in settlement of a claim of race discrimination made pursuant to title VII of the Civil Rights Act of 1964 is not excludable from gross income pursuant to sec. 104(a)(2), I.R.C., as an amount received on account of personal injury. United States v. Burke, 504 U.S.    , 112 S. Ct. 1867 (1992).

T was discharged from her employment with company G in the midst of an investigation by the Equal Employment Opportunity Commission (EEOC) into sex-based wage disparity in one of the departments of the company. T was not employed in that department, but was perceived by G as having played a significant role in instigating the investigation and participating therein. The EEOC brought suit to enjoin G from interfering with its investigation and, inter alia, to require G to reinstate T, who was not a party to that suit. The suit was settled upon G's payment of $ 20,000 to T in consideration of her release of a broad range of potential claims against it, including a claim for reinstatement. Held: That a substantial portion of the payment was allocable to a claim for a tort-like injury and a substantial portion of the payment was allocable to other claims, predominantly of a contractual nature. In the absence of more precise evidence in the record, it is found that half of the $ 20,000 was allocable to the tort-like claim. Cf. Eisler v. Commissioner, 59 T.C. 634, 640-641 (1973). It is therefore held, further, that half of the $ 20,000 payment is excludable from T's gross income under sec. 104(a)(2), I.R.C. 1954, as \damages received * * * on account of personal injuries.\

P is a trust created under a collective bargaining agreement between the Teamsters Union (U) and the Contractors Association (A). When operational, P proposes to award grants to eligible employees and their families for the purpose of furthering their education. P's only source of funds is contributions received from members of A under the terms of the collective bargaining agreement. During the negotiations between A and U prior to the completion of the collective bargaining agreement, representatives of U requested the establishment of P as part of the allocation of an agreed financial settlement between wages and indirect compensation. Under the bargaining agreement, members of A are required to make contributions to P in the amount of 5 cents per hour of employment of covered employees; if contributions are not paid, members of U are authorized to strike. Held, because its primary purpose is to provide a form of indirect compensation to employees covered by the collective bargaining agreement, P is not operated \exclusively\ for any of the purposes described in sec. 501(c)(3), I.R.C. 1954, notwithstanding that P's proposed activities will to some extent further charitable purposes.

Petitioner recovered $ 18,030.90, after expenses and attorneys' fees, in settlement of a job discrimination suit under title VII of the Civil Rights Act of 1964. Petitioner reported half of that amount as income under sec. 61, I.R.C. 1954, and excluded the other half as personal injury damages under sec. 104(a)(2), I.R.C. 1954. Held, the entire amount recovered constitutes income under sec. 61, I.R.C. 1954.

On June 23, 1964, a portion of petitioners' land was condemned by the Commonwealth of Pennsylvania. Appraisal values were obtained. On June 13, 1966, petitioners filed a Petition for Appointment of a Board of Viewers requesting just compensation and detention damages. The Court of Common Pleas appointed a Board of Viewers with direction to assess damages in accordance with law. Petitioners later made an offer to settle their claim and Pennsylvania made a counteroffer. The condemnation claim was settled on the basis of Pennsylvania's counteroffer ($ 44,500) which included detention damages, interest, and cost of litigation. On October 31, 1966, the Court of Common Pleas approved the settlement by an order, which allocated $ 14,500 for the land condemned and $ 30,000 for severance damages. The inclusion of interest as one element in a lump-sum condemnation settlement is required as a standard practice by Pennsylvania law. In placing the claim in line for payment pursuant to the settlement, the Commonwealth of Pennsylvania made an allocation of the gross amount ($ 44,500) between detention damages of $ 5,804.35 and the net award of $ 38,695.65. Held, that $ 5,804.35 was received by petitioners as detention damages, which is in the nature of interest, and therefore taxable as ordinary income under sec. 61(a)(4), I.R.C. 1954.

Petitioner, a noncompetent Indian enrolled with the Gros Ventre Tribe, during the years 1958 and 1959 conducted farming and ranching operations on 20,547.14 acres of land on the Fort Belknap Indian Reservation. He had acquired part of the land used for this operation by allotment, part by gift from his mother who had received the land by allotment, part under a grazing permit, part by lease, part by purchase from other allottees, and part by a transfer of all the heirs' rights or claims by the Regional Director of the Indian Bureau in an order transferring inherited lands. All the original allotments were to the United States in trust for the allottee and contained a provision that at the expiration of 25 years the land would be transferred to the allottee \free from all charge and incumbrance whatsoever.\ Title to all lands allotted to, given to, or purchased by petitioner was taken in the name of the United States as trustee for petitioner. Held: Under the decision in Squire v. Capoeman, 351 U.S. 1 (1956), and respondent's ruling stating his application of the holding in that case, petitioner's income derived from farming and ranching activities on his allotted lands, his lands received by gift from his mother, and his land acquired by order transferring inherited lands is exempt from Federal income tax. Petitioner's income from farming and ranching activities on all the other lands used by him for such activities during 1958 and 1959 is subject to Federal income tax.