## Facts

- Eugene Amos, Jr., a television cameraman, was injured while filming an NBA game when player Dennis Rodman kicked him after an on-court incident.
- Amos was transported to a hospital, reported neck pain, and was observed limping and complaining of pain.
- Amos pursued civil claims against Rodman and entered a confidential settlement agreement and release for a lump-sum payment of $200,000.
- The agreement released Rodman from all claims arising from the incident and imposed strict confidentiality and non-cooperation obligations on Amos (including restrictions on discussing the incident and participating in related proceedings).
- The agreement included a liquidated-damages provision requiring Amos to repay $200,000 upon breach of confidentiality.
- Amos excluded the entire $200,000 from gross income on his 1997 return as damages for personal physical injuries under I.R.C. § 104(a)(2).
- The Commissioner determined a deficiency for 1997, treating most of the settlement as taxable; other deduction issues were conceded, leaving only the settlement’s tax characterization for decision.

## Issues

1. Whether the $200,000 settlement payment was excludable from gross income under I.R.C. § 104(a)(2) as damages received on account of personal physical injuries or physical sickness.
2. If the settlement served multiple purposes, how to allocate the lump-sum payment between excludable personal-physical-injury damages and taxable amounts paid for other consideration (including confidentiality and non-cooperation).

## Decision

- The Tax Court held that $120,000 of the $200,000 settlement was excludable under I.R.C. § 104(a)(2).
- The court held that the remaining $80,000 was includable in gross income as paid for non-§ 104(a)(2) consideration, chiefly confidentiality-related obligations.
- The deficiency was sustained in part and overruled in part, with computations to follow.

## Legal Principles

- Gross income under I.R.C. § 61(a) is broad, and exclusions from income are construed narrowly.
- I.R.C. § 104(a)(2) excludes damages (other than punitive damages) received on account of personal physical injuries or physical sickness.
- To qualify under § 104(a)(2), the taxpayer must show a tort or tort-type cause of action and that the proceeds were received on account of personal physical injuries or physical sickness.
- The taxpayer bears the burden of proving the Commissioner’s determination erroneous.
- When a settlement is a global lump sum and the agreement indicates multiple types of consideration, the payment may be allocated between excludable and taxable components based on the payor’s intent and the terms and context of the settlement.
- Amounts paid in exchange for confidentiality, silence, non-cooperation, or similar non-injury consideration are not “on account of” personal physical injuries and are includable in income.

## Conclusion

The Tax Court treated the settlement as serving both compensatory and non-compensatory purposes and allocated the lump sum accordingly, excluding only the portion attributable to personal physical injuries under § 104(a)(2) and taxing the portion attributable to confidentiality-related consideration.


Amos v. Comm’r, 86 T.C.M. (CCH) 663 (T.C. 2003)