Byrne v. Commissioner

Excerpt

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.\