                         T.C. Memo. 2008-86



                       UNITED STATES TAX COURT



               GODFREY L.C. PHELPS, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 20569-05.               Filed April 7, 2008.



     Godfrey L.C. Phelps, pro se.

     Michael T. Sargent, for respondent.



                         MEMORANDUM OPINION


     CHIECHI, Judge:    This case is before the Court on respon-

dent’s motion for partial summary judgment.1     We shall grant


     1
      Respondent filed a memorandum of law (respondent’s memoran-
dum of law) in support of respondent’s motion for partial summary
judgment and a declaration (respondent’s declaration) in support
of that motion. We shall refer collectively to respondent’s
motion for partial summary judgment, respondent’s memorandum of
                                                   (continued...)
                                - 2 -

respondent’s motion.

                              Background

     The record establishes and/or the parties do not dispute the

following.

     At the time petitioner filed the petition in this case, his

mailing address was in Arnold, Maryland.

     On February 10, 1999, petitioner filed a complaint with the

Office of Federal Contract Compliance Programs in which he

alleged that Schneider National Carriers, Inc. (Schneider), was a

Federal contractor which engaged in discriminatory work prac-

tices.   On October 4, 1999, that complaint was dismissed on the

ground that Schneider was not a Federal contractor under 41

C.F.R. sec. 60-1.40 (2007).

     Around September 2, 1999, petitioner submitted to Schneider

an application for employment (petitioner’s employment applica-

tion).   Schneider denied that application.

     Around February 17, 2000, petitioner filed charges against

Schneider with the Equal Employment Opportunity Commission and

the Wisconsin Department of Workforce Development.   Petitioner

alleged in those charges (1) that Schneider discriminated against


     1
      (...continued)
law, and respondent’s declaration as respondent’s motion.

     In respondent’s motion, respondent concedes for purposes of
that motion only the addition to tax under sec. 6651(a)(1) that
respondent determined in the notice of deficiency with respect to
petitioner’s taxable year 2001.
                                - 3 -

him on the basis of his age, (2) that Schneider’s “pre-employment

screening procedures and inquiries as to a potential employee’s

felony convictions have a discriminatory impact on African-

American men”, and (3) that Schneider engaged in unlawful retali-

ation.    (We shall refer to the foregoing charges that petitioner

filed against Schneider as petitioner’s claims against Schnei-

der.)

     Petitioner and Schneider entered into an agreement, effec-

tive as of September 29, 2001, that was entitled “RELEASE AND

SETTLEMENT AGREEMENT” (settlement agreement).    That agreement

provided in pertinent part:

     THIS RELEASE AND SETTLEMENT AGREEMENT (the “Agreement”)
     is made by and between Godfrey L.C. Phelps (“Mr.
     Phelps”) and Schneider National Carriers, Inc. (the
     “Company”), and, as set forth in Section 9 below, takes
     effect on the eighth day after the date Mr. Phelps
     signs this Agreement for delivery to the Company (the
     “Effective Date of this Agreement”).

                              Recitals

     A.   Mr. Phelps submitted an application for employment
          with the Company on or about September 2, 1999.

     B.   On February 10, 1999, Mr. Phelps filed a complaint
          with the Office of Federal Contract Compliance
          Programs in which he alleged that the Company was a
          federal contractor who engaged in discriminatory
          work practices (the “OFFCP [sic] Complaint”). This
          complaint was dismissed on October 4, 1999 because
          the Company was not found to be a federal contrac-
          tor as defined under 41 CFR 60-1.40.

     C.   On or about February 17, 2000, Mr. Phelps filed
          Charge No. 260-A0-0330 against the Company with the
          Equal Employment Opportunity Commission (“EEOC
          Charge”) and the Wisconsin Department of Workforce
                              - 4 -

         Development. Mr. Phelps’ Charges complained that
         the Company discriminated against him on the basis
         of age and because the Company’s pre-employment
         screening procedures and inquiries as to a
         potential employee’s felony convictions have a
         discriminatory impact on African-American men, as
         well as unlawful retaliation.

D.       The Company denies any liability to Mr. Phelps,
         whether based on any claims referred to above or
         for any other reason, including violation of Title
         VII of the Civil Rights Act of 1964 and/or any
         other federal, state, or local laws, regulations,
         and/or ordinances of any kind.

E.       Mr. Phelps and the Company have determined that it
         would be in their mutual best interests to settle
         and resolve the EEOC Charge and any and all other
         potential or actual disagreements and controversies
         between them, and both Mr. Phelps and the Company
         desire to settle and resolve the same in accordance
         with the terms and conditions of this Agreement.

THEREFORE, in consideration of the mutual covenants
and conditions of this Agreement, including Recitals A
through E above and Sections 1 through 13 below, Mr.
Phelps and the Company hereby agree as follows:

1.        Payment to be Made by the Company. Within seven
          business days after the Effective Date of this
          Agreement, the Company will pay Mr. Phelps the sum
          of $20,000 as non-wage damages recoverable under
          the FLSA, ADEA and Title VII. The Company will
          file a Form 1099 with the IRS and Mr. Phelps shall
          be responsible for payment of any taxes due or
          penalties, and related costs. * * *

     *         *       *       *       *       *       *

 2.       Release of the Company. In consideration of the
          payment to be made in accordance with Section 1,
          Mr. Phelps hereby fully and forever releases,
          acquits, and discharges the Company from any and
          all liability, accrued or unaccrued, known or
          unknown, asserted or unasserted, on account of any
          and all debts, claims, suits, demands, causes of
          action, or controversies of any nature for all
          injuries, losses, and damages (including, but not
                          - 5 -

     limited to, punitive damages), whether at law or
     in equity, contract or tort, or whether judicial
     or administrative in nature, that he has or may
     have against the Company as of the date of his
     execution of this Agreement, excepting only his
     rights under this Agreement. Subject to that
     exception, the release in the previous sentence
     includes, but is not necessarily limited to:

     a.   Any and all liability of the Company resulting
          from, arising out of, or connected with Mr.
          Phelps’ application for employment with the
          Company or the Company’s decision not to hire
          Mr. Phelps;

     b.   Any and all liability of the Company resulting
          from, arising out of, or connected with rights
          or claims arising under Title VII of the Civil
          Rights Act of 1964, the Civil Rights Act of
          1991, the Age Discrimination in Employment
          Act, the Americans with Disabilities Act, the
          Rehabilitation Act of 1973, the National
          Labor Relations Act, the Maryland Fair
          Employment Practices Act, the Wisconsin Fair
          Employment Act, and any other federal, state,
          or local laws, regulations, ordinances of any
          kind, and the common law;

     c.   Any and all liability of   the Company resulting
          from, arising out of, or   connected with the
          OFCCP Complaint referred   to in Recital B and
          the EEOC Charge referred   to in Recital C;

 *         *       *       *         *       *       *

3.   Release of Mr. Phelps. In consideration of the
     mutual covenants of this Agreement, the Company
     hereby releases Mr. Phelps from any and all
     liability on account of any and all debts, claims,
     suits, demands, causes of action, or controversies
     of any nature for all injuries, losses, and
     damages (including, but not limited to, punitive
     damages), whether at law or in equity, contract or
     tort, or whether judicial or administrative in
     nature, that the Company has or may have against
     Mr. Phelps as of the date this Agreement is signed
     on behalf of the Company, excepting only any
     liability incurred by the Company because of the
                         - 6 -

     failure or refusal of Mr. Phelps to perform any of
     his obligations under this Agreement; and

4.   Withdrawal of the Complaint; Covenant Not to sue
     on Released Claims. At the time of his execution
     and delivery of this Release and Settlement
     Agreement, Mr. Phelps agrees to request the
     dismissal of the Charges referred to in Recital C
     by signing and mailing to the Company’s attorney,
     Steven B. Rynecki, at 411 E. Wisconsin Avenue,
     Suite 700, Milwaukee, Wisconsin 53201, a Request
     for Withdrawal of Complaint in the form attached
     to this Agreement * * *. Mr. Phelps agrees and
     promises to sign any other documents and to take
     any other actions that may be necessary or
     desirable to obtain the dismissal of the Charges
     as required. In consideration of the actions to
     be taken by the Company in accordance with Section
     1 above, Mr. Phelps agrees and promises not to
     commence or continue any legal, administrative, or
     other proceedings of any nature against the
     Company based on any debts, claims, demands,
     causes of action, or controversies released in
     this Agreement.

 *        *       *       *       *       *       *

6.   Denial of Liability. In entering into this
     Agreement, the Company does not admit any
     liability to Mr. Phelps of any nature or for any
     reason or the violation of any law or regulation,
     any such liability or violation being hereby
     expressly denied, including, but not limited to,
     any violation of or liability under any of the
     statutes and claims referred to in Section 2.

7.   Parties Benefited and Bound; Real Party in
     Interest. This Agreement is binding upon and
     inures to the benefit of the Company and Mr.
     Phelps and their respective heirs, representa-
     tives, successors, beneficiaries, and assigns.
     Mr. Phelps represents that he is the real party in
     interest with respect to all claims released in
     this Agreement and that he has not assigned to any
     other person any claim that could be asserted
     against the Company.

 *        *       *       *       *       *       *
                           - 7 -


 9.   Older Workers Benefit Protection Act. This
      Agreement is governed by the Older Workers Benefit
      Protection Act. Under that Act, Mr. Phelps has at
      least 21 days after being given this Agreement
      during which he may consider whether or not to
      sign this Agreement. Further, in compliance with
      that Act, Mr. Phelps has seven days following his
      signing of this Agreement during which he may
      revoke this Agreement. Therefore, the “Effective
      Date of this Agreement” is defined as the eighth
      day after the date Mr. Phelps signs this Agreement
      for delivery to the Company, and this Agreement
      will not be effective or enforceable until such
      Effective Date. However, the release in Section 2
      does not apply to any rights or claims that may
      arise after the date Mr. Phelps signs this
      Agreement. Further, if Mr. Phelps revokes this
      Agreement during the seven-day period referred to
      above, the Company will not have any obligation to
      him under this Agreement.

10.   Advice to Consult Legal Counsel. Since this
      Agreement includes a waiver of Mr. Phelps’ rights
      to pursue recovery of damages against the Company
      under Title VII of the Civil Rights Act of 1964,
      the Age Discrimination in Employment Act, and the
      other statutes and claims referred to in Section 2
      and a release of any and all liability of the
      Company to Mr. Phelps is based on all such
      statutes and claims, Mr. Phelps is hereby advised
      to consult an attorney before signing this
      Agreement, and, by signing the Agreement,
      acknowledges that he has done so.

11.   Entire Agreement. This Agreement constitutes the
      entire agreement for the settlement of the matters
      mentioned herein and supersedes all prior corre-
      spondence, discussions, and understandings for the
      settlement of such matters.

  *         *       *       *       *       *       *

13.   Acknowledgment. In signing this Agreement, Mr.
      Phelps acknowledges and agrees:

      a.   That he has been given at least 21 days to
           read this Agreement, to discuss the terms and
                               - 8 -

               conditions of the Agreement with his attorney
               and any other advisers of his choice, and to
               consider whether or not to sign the Agreement;

          b.   That he has read this Agreement and fully
               understands the terms and conditions of the
               Agreement, which are contractual and not a
               mere recital;

          c.   That he has not relied on any statement or
               representation made by or on behalf of the
               Company other than as set forth in this
               Agreement, but wholly upon his own judgment,
               belief, and knowledge and the advice of any
               advisers of his choice; and

          d.   That he is voluntarily signing this Agreement
               with full knowledge as to its meaning and
               consequences and accepting the consideration
               to be provided under the Agreement for the
               purpose of making a full and final compromise,
               adjustment, and settlement of all the matters
               mentioned above.

     Pursuant to the settlement agreement, Schneider paid $20,000

(settlement proceeds) to petitioner in 2001.   Pursuant to that

agreement, Schneider submitted to the Internal Revenue Service

Form 1099-MISC, Miscellaneous Income (Form 1099-MISC).   That form

showed that Schneider paid $20,000 to petitioner in 2001.2

     On May 1, 2002, petitioner electronically filed Form 1040,

U.S. Individual Income Tax Return (petitioner’s 2001 return), for



     2
      The Court takes judicial notice that the instructions for
Form 1099-MISC provide, inter alia, that the following items are
to be reported in that form as “Other income”: “Generally, * * *
any damages for nonphysical injuries or sickness, and any other
taxable damages.” Those instructions further provide in perti-
nent part: “Generally, report all compensatory damages for
nonphysical injuries or sickness, such as employment discrimina-
tion or defamation.”
                                - 9 -

his taxable year 2001.   Petitioner included Schedule C, Profit or

Loss From Business (petitioner’s 2001 Schedule C), as part of

that return.    In that schedule, petitioner described his business

as “SETTLEMENT TITLE VII”.

     In petitioner’s 2001 Schedule C, petitioner reported $20,000

of other income and claimed a $20,000 deduction for other ex-

penses.    Petitioner attached Form 8275, Disclosure Statement, to

petitioner’s 2001 return with respect to that claimed deduction.

That form stated:

     THE TAXPAYER RECEIVED PERSONAL INJURY DAMAGES FORM AN
     EMPLOYMENT DISCRIMINATION SUIT THAT WAS FILED UNDER
     TITLE VII OF THE CIVIL RIGHTS ACT THE SUM OF SAID
     SETTLEMENT ( 20,000) WAS INACCURATELY REPORTED BY THE
     DEFENDANT AS NONEMPLOYEE COMPENSATION ON FORM 1099-MISC
     ACCORDING TO CODE SEC 61, PAR 1624, COMPENSATION FOR
     INJURIES, DAMAGES OR OTHER HARMS, UNDER THIS SECTION,
     ARE NON TAXABLE [Reproduced literally.]

     On August 3, 2005, respondent issued to petitioner a notice

of deficiency (notice) with respect to petitioner’s taxable year

2001.    In that notice, respondent determined that the settlement

proceeds are includible as “Other Income” and are not excludable

from gross income.3   In the notice, respondent also determined

that petitioner is liable for the addition to tax under section




     3
      In making the determinations with respect to the settlement
proceeds, respondent concluded that those proceeds are not
includible as income from a trade or business and are not deduct-
ible under sec. 162(a).
                               - 10 -

6651(a)(1).4

                             Discussion

     The Court may grant summary judgment where there is no

genuine issue of material fact and a decision may be rendered as

a matter of law.    Rule 121(b); Sundstrand Corp. v. Commissioner,

98 T.C. 518, 520 (1992), affd. 17 F.3d 965 (7th Cir. 1994).

     In petitioner’s response to respondent’s motion (peti-

tioner’s response), petitioner advances what appear to be three

principal arguments in support of his position that the Court

should deny that motion.5   We turn first to what we understand to

be petitioner’s argument that the Court should deny respondent’s

motion because respondent’s filing of that motion constitutes

fraud on the part of respondent and respondent’s representatives,

including respondent’s counsel of record, and racial discrimina-

tion.    In this regard, petitioner argues, inter alia, that



     4
      All section references are to the Internal Revenue Code in
effect for the year at issue. All Rule references are to the Tax
Court Rules of Practice and Procedure.
     5
      In petitioner’s 2001 Schedule C, petitioner described his
business as “SETTLEMENT TITLE VII”. In that schedule, petitioner
reported $20,000 of other income and claimed a $20,000 deduction
for other expenses. In the notice, respondent determined that
the settlement proceeds are not includible as Schedule C income
and are not deductible under sec. 162(a). Petitioner does not
dispute (1) that during 2001 he was not engaged in the trade or
business shown in petitioner’s 2001 Schedule C, (2) that the
settlement proceeds are not includible as Schedule C income, and
(3) that he is not entitled to deduct those proceeds under sec.
162(a). Instead, petitioner argues that the settlement proceeds
are excludable from gross income under sec. 104(a)(2).
                             - 11 -

respondent’s motion

     cannot be used to circumvent the truth severely limit
     one’s case and avoid genuine issued that are in dispute
     that may cause enormous embarrassment to the United
     States Government in its Treatment of Black Americans.

       *       *       *       *        *       *         *

     * * * in the instant case certain members of the IRS
     have been notoriously treacherous through their fraud
     deceit misrepresentation omissions of material facts,
     indignation, and psychological pressure of intimidation
     * * * [Reproduced literally.]

We reject petitioner’s argument.   Rule 121(a) provides that

“Either party may move, with or without supporting affidavits,

for a summary adjudication in the moving party’s favor upon all

or any part of the legal issues in controversy.”    Respondent

filed respondent’s motion in accordance with that Rule.

     We turn now to what we understand to be petitioner’s argu-

ment that the Court should deny respondent’s motion because the

settlement agreement is illegal.   According to petitioner, the

settlement agreement

     is being challenged due to financial hardship, emo-
     tional stress, psychological trauma and the fraud that
     was perpetrated by Schneider National Carrier Inc and
     the complicity of the United States Government in their
     refusal to enforce the employment laws.

We reject petitioner’s argument.   The settlement agreement that

petitioner and Schneider executed provided, inter alia, (1) that

petitioner had been given at least 21 days to read that agreement

and discuss its terms with his attorney and any other advisers of

his choice, (2) that he read that agreement and fully understood
                                 - 12 -

its terms and conditions, and (3) that he voluntarily signed that

agreement with full knowledge as to its meaning and consequences.

     We turn finally to what we understand to be petitioner’s

argument that the Court should deny respondent’s motion because a

trial is necessary to examine the settlement agreement in order

to determine whether the settlement proceeds are excludable under

section 104(a)(2).     Before addressing that argument, we shall

summarize certain principles applicable to our determination of

whether the settlement proceeds are excludable under that sec-

tion.

     Section 61(a) provides the following sweeping definition of

the term “gross income”:     “Except as otherwise provided in this

subtitle, gross income means all income from whatever source

derived”.     Not only is section 61(a) broad in its scope, Commis-

sioner v. Schleier, 515 U.S. 323, 328 (1995), exclusions from

gross income must be narrowly construed, id.

        Section 104(a)(2) provides that gross income does not

include:

              (2) the amount of any   damages (other than punitive
        damages) received (whether    by suit or agreement and
        whether as lump sums or as    periodic payments) on ac-
        count of personal physical    injuries or physical sick-
        ness;

        The regulations under section 104(a)(2) provide in pertinent

part:

        The term “damages received (whether by suit or agree-
        ment)” means an amount received (other than workmen’s
                             - 13 -

     compensation) through prosecution of a legal suit or
     action 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.

     The Supreme Court of the United States (Supreme Court)

summarized the requirements of section 104(a)(2) as follows:

          In sum, the plain language of § 104(a)(2), the
     text of the applicable regulation, and our decision in
     Burke establish two independent requirements that a
     taxpayer must meet before a recovery may be excluded
     under § 104(a)(2). First, the taxpayer must demon-
     strate 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.” * * *

Commissioner v. Schleier, supra at 336-337.

     When the Supreme Court issued its opinion in Commissioner v.

Schleier, supra, section 104(a)(2), as in effect for the year at

issue in Schleier, required, inter alia, that, in order to be

excluded from gross income, an amount of damages had to be

received “on account of personal injuries or sickness”.   After

the Supreme Court issued its opinion in Schleier, Congress

amended (1996 amendment) section 104(a)(2), effective for amounts

received after August 20, 1996, by adding the requirement that,

in order to be excluded from gross income, any amount received

must be on account of personal injuries that are physical or
                              - 14 -

sickness that is physical.6   Small Business Job Protection Act of

1996, Pub. L. 104-188, sec. 1605, 110 Stat. 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 in order for an

amount to qualify for exclusion from gross income under that

section.

     Where damages are received pursuant to a settlement agree-

ment, such as is the case here, the nature of the claim that was

the actual basis for settlement controls whether such damages are

excludable under section 104(a)(2).    United States v. Burke, 504

U.S. 229, 237 (1992).   The determination of the nature of the

claim is factual.   Robinson v. Commissioner, 102 T.C. 116, 126

(1994), affd. in part, revd. in part, and remanded on another

issue 70 F.3d 34 (5th Cir. 1995); Seay v. Commissioner, 58 T.C.

32, 37 (1972).   Where there is a settlement agreement, that

determination is usually made by reference to it.   See Knuckles

v. Commissioner, 349 F.2d 610, 613 (10th Cir. 1965), affg. T.C.

Memo. 1964-33; Robinson v. Commissioner, supra at 126.   If the


     6
      Sec. 104(a) provides that emotional distress is not to be
treated as a physical injury or physical sickness for purposes of
sec. 104(a)(2), except for damages not in excess of the amount
paid for medical care attributable to emotional distress. In
this connection, the legislative history of the 1996 amendment
states: “It is intended that the term emotional distress in-
cludes symptoms (e.g., insomnia, headaches, stomach disorders)
which may result from such emotional distress.” H. Conf. Rept.
104-737, at 301 n.56 (1996), 1996-3 C.B. 741, 1041 n.56.
                                - 15 -

settlement agreement lacks express language stating what the

amount paid pursuant to that agreement was to settle, the intent

of the payor is critical to that determination.     Knuckles v.

Commissioner, supra at 613; see also Agar v. Commissioner, 290

F.2d 283, 284 (2d Cir. 1961), affg. per curiam T.C. Memo. 1960-

21.   Although the belief of the payee is relevant to that in-

quiry, the character of the settlement payment hinges ultimately

on the dominant reason of the payor in making the payment.        Agar

v. Commissioner, supra at 284; Fono v. Commissioner, 79 T.C. 680,

696 (1982), affd. without published opinion 749 F.2d 37 (9th Cir.

1984).   Whether the settlement payment is excludable from gross

income under section 104(a)(2) depends on the nature and the

character of the claim asserted, and not upon the validity of

that claim.     See Bent v. Commissioner, 87 T.C. 236, 244 (1986),

affd. 835 F.2d 67 (3d Cir. 1987); Glynn v. Commissioner, 76 T.C.

116, 119 (1981), affd. without published opinion 676 F.2d 682

(1st Cir. 1982); Seay v. Commissioner, supra at 37.

      We now address what we understand to be petitioner’s argu-

ment that the Court should deny respondent’s motion because a

trial is necessary.    We reject petitioner’s argument.   In order

to determine whether the settlement proceeds are excludable under

section 104(a)(2), the Court must, as petitioner acknowledges,

examine the settlement agreement.    See Knuckles v. Commissioner,

supra at 613.    Examination of that agreement resolves the issue
                                - 16 -

presented under that section.    We conclude that there is no

genuine issue of material fact with respect to our determination

of whether the settlement proceeds are excludable under section

104(a)(2).

     We consider now whether the $20,000 of settlement proceeds

that petitioner received under the settlement agreement are

excludable under section 104(a)(2).7     The settlement agreement

provided in pertinent part:

     the Company will pay Mr. Phelps the sum of $20,000 as
     non-wage damages recoverable under the FLSA [Fair Labor
     Standards Act], ADEA [Age Discrimination in Employment
     Act] and Title VII [of the Civil Rights Act]. The
     Company will file a Form 1099 with the IRS and Mr.
     Phelps shall be responsible for payment of any taxes
     due or penalties, and related costs. * * *[8]

     The Fair Labor Standards Act of 1938 (FLSA), ch. 676, 52

Stat. 1060 (current version at 29 U.S.C. secs. 201-219 (2000)),


     7
      In petitioner’s claims against Schneider that he filed
around Feb. 17, 2000, petitioner alleged that Schneider engaged
in age discrimination, racial discrimination, and unlawful
retaliation (i.e., discrimination against an individual who has
filed a claim alleging unlawful employment practices).

     On Feb. 10, 1999, petitioner also filed a complaint with the
Office of Federal Contract Compliance Programs in which he
alleged that Schneider was a Federal contractor which engaged in
discriminatory work practices. That complaint was dismissed on
the ground that Schneider was not a Federal contractor under 41
C.F.R. sec. 60-1.40 (2007).
     8
      Sec. 2 of the settlement agreement contained boilerplate
language releasing Schneider from “any and all liability” with
respect to, inter alia, any claims that petitioner may have had
against it. We do not attribute any significance to that
boilerplate language. See Ndirika v. Commissioner, T.C. Memo.
2004-250.
                                       - 17 -

addresses unpaid minimum wages and unpaid overtime compensation.

29 U.S.C. secs. 206 and 207.           The relief available under the FLSA

for unpaid minimum wages is damages in the amount of those unpaid

wages and an additional equal amount as liquidated damages.             Id.

sec. 216(b).           The relief available under the FLSA for unpaid

overtime compensation is damages in the amount of that unpaid

compensation and an additional equal amount as liquidated dam-

ages.        Id.9    Compensation for personal injuries is not a form of

relief under the FLSA.10

     The Age Discrimination in Employment Act of 1967 (ADEA),

Pub. L. 90-202, 81 Stat. 602 (current version at 29 U.S.C. secs.

621-634 (2000)), addresses age discrimination in employment.

29 U.S.C. sec. 623.           The relief available under the ADEA is the

payment of back wages and liquidated damages that are punitive in

nature.        Id. sec. 626(b); see also Commissioner v. Schleier, 515

U.S. at 336.           The Supreme Court held in Schleier that “recovery

under the ADEA is not one that is ‘based upon tort or tort type

rights.’”           Id.   The Supreme Court further held in Schleier that

“liquidated damages under the ADEA, like back wages under the

ADEA, are not received ‘on account of personal injury or sick-

ness.’”        Id. at 332.


     9
      See also Jacobs v. Commissioner, T.C. Memo. 2000-59, affd.
sub nom. Connelly v. Commissioner, 22 Fed. Appx. 967 (10th Cir.
2001).
        10
             See Jacobs v. Commissioner, supra.
                                - 18 -

     Title VII of the Civil Rights Act of 1964 (title VII), Pub.

L. 88-352, 78 Stat. 253 (current version at 42 U.S.C. secs.

2000e-2000e-17 (2000)), addresses, inter alia, racial discrimina-

tion in employment, 42 U.S.C. secs. 2000e-2 and 2000e-3.      The

relief available under title VII is injunctions, backpay, and

other equitable relief.     Id. sec. 2000e-5(g); see also United

States v. Burke, 504 U.S. at 238.     The Supreme Court held in

Burke that title VII does not redress a tort-type personal injury

within the meaning of section 104(a)(2) and the applicable

regulations.   United States v. Burke, supra at 241.

     In 1991, Congress enacted the Civil Rights Act of 1991, Pub.

L. 102-166, sec. 102, 105 Stat. 1072-1074 (current version at 42

U.S.C. sec. 1981a (2000)), which expanded the relief available in

the case of “intentional discrimination” in employment.      Under

the Civil Rights Act of 1991, a person who is a victim of “inten-

tional discrimination * * * may recover compensatory damages for

future pecuniary losses, emotional pain, suffering, inconve-

nience, mental anguish, loss of enjoyment of life, and other

nonpecuniary losses”.     42 U.S.C. sec. 1981a(b)(3); see also

United States v. Burke, supra at 241 n.12.     The Civil Rights Act

of 1991 provides that the term “intentional discrimination” does

not include “an employment practice that is unlawful because of

its disparate impact”.     42 U.S.C. sec. 1981a(a)(1).   In peti-

tioner’s claims against Schneider, petitioner did not refer to
                               - 19 -

any intentional discrimination on the part of Schneider.   In-

stead, in those claims, petitioner alleged that Schneider’s “pre-

employment screening procedures and inquiries as to a potential

employee’s felony convictions have a discriminatory impact on

African-American men”.

     On the record before us, we find that the settlement pro-

ceeds were not received on account of tort-like personal inju-

ries, let alone tort-like personal physical injuries or physical

sickness.11   On that record, we further find that those proceeds

are not excludable under section 104(a)(2) from petitioner’s

gross income for his taxable year 2001.   On the record before us,

we shall grant respondent’s motion.

     We have considered all of the contentions and arguments of

petitioner that are not discussed herein, and we find them to be

without merit, irrelevant, and/or moot.




     11
      In petitioner’s response, petitioner argues that the
settlement proceeds were received on account of “emotional
distress, indignation and psychological trauma”. We reject that
argument. In any event, we note that emotional distress gener-
ally is not to be treated as a physical injury or physical
sickness for purposes of sec. 104(a)(2). See supra note 6.
                        - 20 -

To reflect the foregoing and respondent’s concession,


                              An order granting respondent’s

                         motion and decision will be entered

                         for respondent as to the deficiency

                         and for petitioner as to the addi-

                         tion to tax under section

                         6651(a)(1).
