NICHELLE G. PEREZ, PETITIONER v. COMMISSIONER
     OF INTERNAL REVENUE, RESPONDENT

    Docket No. 9103–12.           Filed January 22, 2015.

   P received large sums of money in exchange for undergoing
procedures to donate her eggs to infertile couples. Under P’s
contracts, the sums she received were designated compensa-
tion for pain and suffering. P did not report these amounts on
her 2009 tax return. R issued a notice of deficiency. Held:
Compensation for pain and suffering resulting from the
consensual performance of a service contract is not ‘‘damages’’
under I.R.C. sec. 104(a)(2) and must be included in gross
income.




                                                                  51
52           144 UNITED STATES TAX COURT REPORTS                      (51)


 Richard A. Carpenter, Jody N. Swan, and Kevan P.
McLaughlin, for petitioner. 1
 Terri L. Onorato, Robert Cudlip, Gordon Lee Gidlund, and
Heather K. McCluskey, for respondent.
  HOLMES, Judge: Nichelle Perez received $20,000 under
contracts that she signed with a clinic before she underwent
a prolonged series of painful injections and operations to
retrieve her unfertilized eggs for transfer to infertile couples.
The contracts said that she was being paid in compensation
for her pain and suffering. The Code says that damages for
pain and suffering are not taxable.
  Was the $20,000 Perez received ‘‘damages’’?

                          FINDINGS OF FACT

  Perez is a 29-year-old single woman from Orange County,
California. She is a high-school graduate and worked as a
full-time sales associate for Sprint. In her early 20s Perez
learned about egg donation. Her Internet search soon led her
to the website of the Donor Source International, LLC—an
egg-donation agency in Orange County that matches egg
donors with women and couples struggling to conceive on
their own.
A. The Donor Source
   The Donor Source is a for-profit California company that
has been in business since 2003. It is one of approximately
30 donor agencies in California and in 2009 supervised
roughly 250 egg-donation cycles for its customers. The Donor
Source recruits donors by advertising on Craigslist, in maga-
zines, and by word of mouth. While any woman can apply to
donate, only nonsmokers between the ages of 21 and 30 who
have no family history of cancer or personal history of infer-
tility or mental disorders will pass the initial screening. For
those who pass, the donation process begins with an online
application; and, if selected, potential donors are invited for
   1 The Court thanks petitioner’s counsel for their outstanding pro bono

work on the unprecedented question that this case raised. It also thanks
the amici curiae who filed briefs on this case: Professor Bridget Crawford
of Pace University School of Law; Professor Lisa Milot of University of
Georgia School of Law; and Professor Timothy M. Todd of Liberty Univer-
sity School of Law.
(51)                  PEREZ v. COMMISSIONER                            53


a consultation to go over the time commitment, needed medi-
cations, and risks of egg donation. They are also subjected to
a series of psychological and physical evaluations, including
blood tests, pap smears, breast exams, and pregnancy tests.
Once approved, the potential donor creates an online profile
that includes a picture, a description of her family history,
and other personal details for prospective parents to view.
   This is all called egg ‘‘donation’’, but the term is a mis-
nomer—the participant in the egg-stimulation and retrieval
is compensated. (There are a small number of true donors—
women who undergo the rigors of the process for an infertile
relative or friend without compensation. This opinion isn’t
about them.) The Donor Source fixes the fee for first-time egg
donors based on where the donor lives. For Southern Cali-
fornia women, first-time donors are promised $5,500—and
the price goes up with each subsequent donation. The Donor
Source is registered with the American Society for Reproduc-
tive Medicine, which caps the compensation for egg donors at
$5,000 to $10,000. 2 The Donor Source also promises to
reimburse its suppliers for their expenses in traveling to and
from their medical appointments.
B. The Contracts
  But such promises of future payments all depend on
prospective parents’ picking a particular donor. Once they do,
the donor signs two contracts—one with the Donor Source
and one with the anonymous intended parents. These con-
tracts let the Donor Source—with the approval of the
intended parents—terminate the relationship with the donor
up until the time the donor begins receiving egg-stimulation
medication—a series of hormone injections formulated to
maximize egg production.
  Perez signed one contract with the Donor Source in Feb-
ruary 2009. It promised her money:

  2 For a summary of antitrust litigation over the alleged price-fixing by
egg-donation agencies, see Kimberly D. Krawiec, ‘‘Kamakahi v. ASRM: The
Egg Donor Price Fixing Litigation’’ (S. Cal. Law Sch. Legal Studies Re-
search Paper No. 14–3), available at http://papers.ssrn.com/sol3/pa-
pers.cfm?abstractlid=2396027, and Kamakahi v. Am. Soc’y for Reprod.
Med., No. 3:11–CV–1781 (N.D. Cal. filed April 12, 2011).
54          144 UNITED STATES TAX COURT REPORTS                      (51)


 Donor Fee: Donor and Intended Parents will agree upon a Donor Fee for
 Donor’s time, effort, inconvenience, pain, and suffering in donating her
 eggs. This fee is for Donor’s good faith and full compliance with the
 donor egg procedure, not in exchange for or purchase of eggs and the
 quantity or quality of eggs retrieved will not affect the Donor Fee.

This meant that if Perez kept her side of the deal, but pro-
duced unusable eggs or no eggs at all, she would still be paid
the contract price. The contract plainly provides that it is not
for the sale of body parts:
 The Parties acknowledge and agree that the funds provided to the Donor
 shall not in any way constitute payment to Donor for her eggs.

   It also allocates foreseeable risk. It states that the donor
assumes ‘‘all medical risks and agree[s] to hold The Donor
Source harmless from any and all liability for any and all
physical or medical harm to herself * * *.’’ The Donor Source
takes its deals seriously, and its representative credibly testi-
fied that the company could sue Perez for breach of contract
if she did not strictly comply with all the requirements.
   The contract between Perez and the intended parents is in
all ways consistent with the contract with the Donor Source.
It provides that Perez’s payment is ‘‘in consideration for all
of her pain, suffering, time, inconvenience, and efforts.’’ The
contract waives any and all parental or custodial rights
Perez may have over the donated eggs. Once the eggs are
removed, they immediately become the property of the
intended parents and are fertilized almost immediately. It
also states:
 This Agreement does not instruct any of the Parties on the issue of tax-
 ation of any payment made or received pursuant to this Agreement or
 to any agreement with The Donor Source.

   After signing the contracts, the Donor Source told Perez to
take birth-control pills for approximately a month to synch
her menstrual cycle with that of the intended mother. Then,
up until March 27, 2009—the egg-retrieval date—Perez
underwent a series of intrusive physical examinations. She
frequently had to travel to a fertility clinic, submit to preg-
nancy tests, endure invasive internal ultrasound examina-
tions, and have a syringe stuck into her arm to draw four to
five vials of blood.
   The needlework followed Perez home. She had to self-
administer hormonal injections using a one-inch needle.
(51)                   PEREZ v. COMMISSIONER                            55


Perez injected herself with 10 units of Lupron each morning
from March 7 to March 11, and she had to take the shots
right into her stomach, which often bruised and hurt her.
With complete credibility Perez said that these procedures
were ‘‘actually very painful * * * it was burning the entire
time you were injecting it.’’
   As the retrieval date approached, the injection schedule
increased. Between March 16 and 25, she had to self-admin-
ister anywhere from one to three daily injections of Lupron,
Follistim, and Menopur. She made around 22 injections into
her stomach during this period. Every time she had to
administer another dose of the hormones, she had to search
for a part of her stomach not already covered in bruises.
   Then on March 25 Perez administered to herself—under
the observation of a professional at a fertility clinic—the final
‘‘trigger shot’’ of hCG. 3 This is an intramuscular injection in
the lower hip that goes through a two-inch needle. The shots
caused Perez significant physical pain deep in her muscles as
well as extreme abdominal bloating.
   On the retrieval date, Perez was required to undergo anes-
thesia for the procedure. Doctors informed her that anes-
thesia carries with it a risk of possible death, and so she had
to sign another liability waiver just before she went under.
Egg removal is a type of surgery, during which the doctor
worked his way into an anesthetized Perez with an
ultrasound needle, and then penetrated her ovaries to har-
vest any viable eggs. The unnatural amount of hormones
she’d taken had done their job, and the doctors were able to
retrieve between 15 and 20 eggs—rather than the body’s
normal production of just one—from her. After it was over,
Perez felt cramped and bloated; she had mood swings, head-
aches, nausea, and fatigue.
   But she’d kept the promises she made and got a check for
$10,000.
   Perez went back for a second round that year. On August
31 she again contracted with the Donor Source. She again
signed a written agreement with the intended parents. Both
  3 Human chorionic gonadotropin, a.k.a. the ‘‘pregnancy hormone.’’ It is a

hormone that exists naturally in the body and is injected into a donor’s
body to stimulate her ovaries to release all the unnaturally large number
of matured eggs that have developed during the stimulation phase of the
process.
56           144 UNITED STATES TAX COURT REPORTS                      (51)


agreements again expressly stated that payment was in
‘‘consideration for all of her pain, suffering, time, inconven-
ience, and efforts’’ and were otherwise identical to the first
set that she had signed as part of the March cycle—including
the liability and waiver provisions. When it was all over, she
again got a check for $10,000.
   The Donor Source sent a Form 1099 to Perez for $20,000
for tax year 2009. After consulting other egg donors online,
Perez concluded that the money was not taxable because it
compensated her only for pain and suffering; therefore, she
left it off her tax return. The Commissioner disagreed and
sent her a notice of deficiency. Perez timely filed a petition,
and we tried the case in California, where Perez still lives.

                                OPINION

  We acknowledge that this case has received some publicity
in tax and nontax publications, which is why it is important
to state clearly what it does not concern. It does not require
us to decide whether human eggs are capital assets. It does
not require us to figure out how to allocate basis in the
human body, or the holding period for human-body parts, or
the character of the gain from the sale of those parts. 4
A. Nature of the Compensation
  So what is this case about? Both parties agree that pay-
ments Perez received were not for the sale of her eggs. Perez
argues that they were in exchange for the pain, suffering,
and physical injuries she endured as part of the egg-retrieval
process; the Commissioner, on the other hand, argues Perez
was simply compensated for services rendered. The only two
cases we have found that are anywhere near this issue are
Green v. Commissioner, 74 T.C. 1229 (1980), and United
States v. Garber, 607 F.2d 92 (5th Cir. 1979). Both involved
the exchange of blood plasma for compensation. In Green, the
taxpayer was paid by the pint, and we found her to be
engaged in the sale of tangible property rather than the
  4 For a thorough discussion of the sale of human-body parts, see Bridget
J. Crawford, ‘‘Our Bodies, Our (Tax) Selves,’’ 31 Va. Tax Rev. 695 (2012),
and Lisa Milot, ‘‘What Are We—Laborers, Factories or Spare Parts? The
Tax Treatment of Transfers of Human Body Materials,’’ 67 Wash. & Lee
L. Rev. 1053 (2010).
(51)                   PEREZ v. COMMISSIONER                            57


performance of services. Green, 74 T.C. at 1234. In Garber,
the Fifth Circuit suggested the taxpayer might be engaged in
the sale of property because the extent of her compensation
was directly related to the concentration of antibodies in the
plasma she produced. Garber, 607 F.2d at 97. It also noted
that Garber had to undergo uncomfortable—and possibly
dangerous—artificial stimulation and plasmapharesis to
produce her plasma. This, the court observed, weighed in
favor of finding that she was engaged in the performance of
services. Id. But because the appeal was from a criminal
conviction, the court concluded that it didn’t have to solve
this puzzle, and could instead decide the case on the ground
that a criminal prosecution for tax evasion was ‘‘an inappro-
priate vehicle for pioneering interpretations of tax law.’’ Id.
at 100.
  Both of Perez’s 2009 contracts with the Donor Source
specify that her compensation is in exchange for her ‘‘good
faith and compliance with the donor egg procedure.’’ Unlike
the taxpayers in Green and Garber, who were paid by the
quantity and the quality of plasma produced, Perez’s com-
pensation depended on neither the quantity nor the quality
of the eggs retrieved, but solely on how far into the egg-
retrieval process she went. On this key point, the testimony
of both parties to the contracts agrees with the contract lan-
guage. We have to find that Perez was compensated for serv-
ices rendered and not for the sale of property.
  And, as we know, ‘‘gross income means all income from
whatever source derived, including * * * compensation for
services.’’ Sec. 61(a)(1). 5 But this general rule of inclusion
has many exceptions, and the one that Perez points us to is
section 104(a)(2). Thus the only issue we address is whether
a taxpayer who suffers physical pain or injury while per-
forming a contract for personal services may exclude the
amounts paid under that service contract as ‘‘damages * * *
received * * * on account of personal physical injuries or
physical sickness’’ even though the taxpayer knew that such
injury or sickness might occur and consented to it in
advance. Sec. 104(a)(2).
  5 Unless otherwise noted, all section references are to the Internal Rev-

enue Code for the year at issue.
58            144 UNITED STATES TAX COURT REPORTS                       (51)


   Before the regulations were amended, section 1.104–1(c)
used to require payments excluded under section 104(a)(2) be
‘‘received * * * 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. (former regulations), amended
by T.D. 9573, 77 Fed. Reg. 3106–01, 3107 (Jan. 23, 2012).
There were thus two separate requirements for a taxpayer to
exclude income under section 104(a)(2): (1) the underlying
cause of action giving rise to the recovery had to be based on
tort or tort-type rights; and (2) the taxpayer had to receive
the payment on account of his or her personal injuries or
sickness. Commissioner v. Schleier, 515 U.S. 323, 333–34
(1995); Blackwood v. Commissioner, T.C. Memo. 2012–190;
Hansen v. Commissioner, T.C. Memo. 2009–87. 6
   But the Secretary has amended these regulations and
abandoned the Schleier language requiring a ‘‘tort or tort-
type right.’’ See Simpson v. Commissioner, 141 T.C. 331, 345
(2013); see also O’Connor v. Commissioner, T.C. Memo. 2012–
317. The regulation now states:
  Section 104(a)(2) excludes from gross income 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 account of per-
  sonal physical injuries or physical sickness. [Sec. 1.104–1(c)(1), Income
  Tax Regs.]

Despite the change in the language, the new requirements
look a lot like the old ones: (1) damages received (2) on
account of personal physical injuries or physical sickness.
B. Damages Requirement
   The regulations define the term ‘‘damages’’ as ‘‘an amount
received (other than workers’ compensation) through prosecu-
tion of a legal suit or action, or through a settlement agree-
ment entered into in lieu of prosecution.’’ Sec. 1.104–1(c)(1),
Income Tax Regs. Perez questions whether the Secretary’s
regulatory interpretation of ‘‘damages’’ is permissible—
whether the word ‘‘damages’’ in the Code allows the Sec-
  6 After Schleier, Congress amended section 104 to limit the exclusion to
‘‘personal physical injuries or physical sickness.’’ See Small Business Job
Protection Act of 1996, Pub. L. No. 104–188, sec. 1605(a), 110 Stat. at 1838
(emphasis added).
(51)                   PEREZ v. COMMISSIONER                            59


retary to implicitly require a lawsuit or threat of one as a
condition of excluding ‘‘damages’’ from taxable income. This
is an argument that the regulation is invalid, which means
we must pull into the Chevron station. See Chevron, U.S.A.,
Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 843–44
(1984); Mayo Found. For Med. Educ. & Research v. United
States, 562 U.S. 44, 45 (2011) (tax law no different from
other areas of administrative law). 7
    We first ask if Congress has spoken directly to the ques-
tion at issue. Chevron, 467 U.S. at 842. If not, we consider
instead whether the Commissioner’s regulation is a ‘‘reason-
able interpretation’’ of Congress’ intent. Id. at 843–44. The
Code doesn’t define ‘‘damages’’, and so we can swiftly hop up
onto Chevron’s step two.
    On this step, we find a regulation invalid only if it is
‘‘ ‘arbitrary or capricious in substance or manifestly contrary
to the statute.’ ’’ Mayo Found., 562 U.S. at 53 (quoting House-
hold Credit Servs., Inc. v. Pfennig, 541 U.S. 232, 242 (2004)).
Perez argues that the definition of ‘‘damages’’ in the regula-
tion is invalid because it requires prosecution (or threat of
prosecution) of a legal suit as a prerequisite for a payment’s
exclusion from income. A walk through the regulation’s his-
tory seems in order here.
    From the beginning of tax time, awards or settlement pro-
ceeds for personal injuries have been excluded from taxation.
See, e.g., Revenue Act of 1918, ch. 18, sec. 213(b)(6), 40 Stat.
at 1066 (1919). The first section 104 regulations, enacted in
1960, required damages to be linked to a tort or tort-type
right. See T.D. 6500, 25 Fed. Reg. 11402, 11490 (Nov. 26,
1960). And this ‘‘tort or tort-type right’’ was the focus of the
regulations for half a century but, as Perez correctly points
out, it is no longer. Perez cites several cases in support of her
argument that we should interpret ‘‘damages’’ in section
104(a)(2) broadly to mean compensation in money received
for a loss regardless of any legal suit or action.
    We start with her reliance on Simpson. Simpson arose
from a settlement between a taxpayer and her former
  7 Although Perez raises this issue for the first time on brief, we do not
find the Commissioner surprised or prejudiced by it. See DiLeo v. Commis-
sioner, 96 T.C. 858, 891–92 (1991), aff ’d, 959 F.2d 16 (2d Cir. 1992);
Markwardt v. Commissioner, 64 T.C. 989, 997 (1975).
60          144 UNITED STATES TAX COURT REPORTS               (51)


employer of a suit brought under the California Fair Employ-
ment and Housing Act, Cal. Gov’t Code sec. 12940 (West
2011). In Simpson we noted that we had previously said that
‘‘ ‘[s]ettlement amounts which are paid to settle workers’ com-
pensation claims are not excludable from gross income under
section 104(a)(2) * * * [because] claims for workers’ com-
pensation do not necessarily involve tort or tort type rights.’ ’’
Simpson, 141 T.C. at 346 (quoting Forste v. Commissioner,
T.C. Memo. 2003–103). And we quoted Forste again to fur-
ther explain that ‘‘ ‘[a] worker’s compensation claim is not
itself a tort or tort type cause of action since its elements
involve fixed awards and since it is based on no-fault prin-
ciples.’ ’’ Id. But we held that the change in the language of
section 104(a)(2) meant that now some or all of the payments
received in workers’-compensation cases could be excluded
from gross income provided the taxpayer could show the por-
tion of the claim ‘‘predicated on the taxpayer’s personal phys-
ical injuries or physical sickness.’’ Id. at 346–47; see also
Domeny v. Commissioner, T.C. Memo. 2010–9, n.6 (in a situa-
tion where the taxpayer negotiated a settlement, finding it
was immaterial whether a taxpayer formally brought allega-
tions against the payor). But Perez’s case is different from
these—we don’t have a settlement here, we have a waiver.
And the waiver wasn’t post hoc.
     In Starrels v. Commissioner, 35 T.C. 646 (1961), aff ’d, 304
F.2d 574 (9th Cir. 1962), we held that amounts contracted in
advance for a consent to an invasion of privacy were taxable
income and weren’t excluded by section 104(a)(2). The Ninth
Circuit agreed with us, and held that the section ‘‘reads most
naturally in terms of payment for injuries sustained prior to
a suit or settlement agreement.’’ Id. at 576 (emphasis added).
The court went on to note that these types of payments for
personal injuries are excluded from gross income ‘‘because
they make the taxpayer whole from a previous loss of per-
sonal rights.’’ Id.
     Again in Roosevelt v. Commissioner, 43 T.C. 77 (1964), we
held that amounts FDR Jr. received for his share of the pro-
ceeds from a play about the life of his father were not
excluded by section 104(a)(2). We reasoned that ‘‘moneys paid
to any taxpayer as compensation for an advance waiver of
possible future damages for personal injuries, would con-
stitute taxable income to him under section 61 of the 1954
(51)                   PEREZ v. COMMISSIONER                              61


Code; and would not be excludable from his gross income
under section 104(a)(2) of said Code.’’ Id. at 87 (emphasis
added).
   Perez very clearly has a legally recognized interest against
bodily invasion. But we must hold that when she forgoes that
interest—and consents to such intimate invasion for pay-
ment—any amount she receives must be included in her tax-
able income. Had the Donor Source or the clinic exceeded the
scope of Perez’s consent, Perez may have had a claim for
damages. But the injury here, as painful as it was to Perez,
was exactly within the scope of the medical procedures to
which she contractually consented. Twice. Her physical pain
was a byproduct of performing a service contract, and we find
that the payments were made not to compensate her for
some unwanted invasion against her bodily integrity but to
compensate her for services rendered.
   But what is one to make of the regulation’s amendment to
remove the ‘‘tort and tort-type right’’ requirement? One
should always pause before holding that an amendment
didn’t change anything. But here the reason is clear—the
amendment did change the law—it just didn’t change the
law for people like Perez. In 1992 the Supreme Court decided
United States v. Burke, 504 U.S. 229 (1992). It held that title
VII backpay settlement awards were not excludable from
income under section 104(a)(2). Id. at 242. At the time the
statute read ‘‘damages received * * * on account of personal
injuries,’’ and the taxpayer pounced on the argument that
her settlement with the Tennessee Valley Authority for
unlawfully discriminating against her because she was a
woman fit that requirement. Not so, said the Supreme Court.
The Court emphasized that since the 1960s the Commis-
sioner has formally linked the section 104(a)(2) exclusion to
‘‘tort or tort-type rights.’’ Id. at 234. It pronounced:
  ‘‘The essential element of an exclusion under section 104(a)(2) is that the
  income involved must derive from some sort of tort claim against the
  payor . . . . As a result, common law tort concepts are helpful in deciding
  whether a taxpayer is being compensated for a ‘personal injury’ ’’ * * *
  [Id., quoting Threlkeld v. Commissioner, 87 T.C. 1294, 1305 (1986).]

A few years later, in Schleier, the Supreme Court reinforced
the tort or tort-type right standard when it held that pay-
ments received in an Age Discrimination in Employment Act
62         144 UNITED STATES TAX COURT REPORTS             (51)


settlement were not excludable under section 104(a)(2).
Schleier, 515 U.S. at 337. The remedial scheme there also did
not comport with traditional tort-type remedies, because the
Act did not provide for compensation keyed to actual harm
suffered. Id. at 335–36.
   Shortly after the restrictive decisions in Burke and
Schleier, Congress amended the Code in the Small Business
Job Protection Act of 1996, Pub. L. No. 104–188, 110 Stat.
1755, and the Secretary in 2009 rewrote his regulations. This
amended Code section and regulation let taxpayers who
recovered under no-fault statutes exclude the ‘‘damages’’ that
they received, even if they did not receive them for a ‘‘tort-
type’’ claim. As we said in Simpson, the effect of removing
the tort requirement from the regulation was to reverse the
result in Burke and allow the exclusion for damages awarded
under no-fault statutes. See Simpson, 141 T.C. at 346.
   In 2012 the Commissioner officially explained that the
‘‘tort-type rights test was intended to distinguish damages for
personal injuries from, for example, damages for breach of
contract.’’ T.D. 9573, 77 Fed. Reg. at 3107. The change in the
section 104 regulation reflected a profusion of remedies for
persons who are physically injured and recover under no-
fault statutes, so that they are treated like those who are
physically injured and recover through more traditional
actions in tort. But that regulation still addresses situations
where a taxpayer settles a claim for physical injuries or
physical sickness before—or at least in lieu of—seeing litiga-
tion through to its conclusion.
   This small change just helped tax regulation keep up with
a bit of a shift in American law toward administrative or
statutory remedies and away from common-law tort for some
kinds of personal injuries. It is not at all arbitrary, capri-
cious, or manifestly contrary to the Code. But it also doesn’t
help Perez. We completely believe Perez’s utterly sincere and
credible testimony that the series of medical procedures that
culminated in the retrieval of her eggs was painful and dan-
gerous to her present and future health. But what matters
is that she voluntarily signed a contract to be paid to endure
them. This means that the money she received was not
‘‘damages’’.
   We conclude by noting that the result we reach today by
taking a close look at the language and history of section 104
(51)               PEREZ v. COMMISSIONER                     63


is also a reasonable one. We see no limit on the mischief that
ruling in Perez’s favor might cause: A professional boxer
could argue that some part of the payments he received for
his latest fight is excludable because they are payments for
his bruises, cuts, and nosebleeds. A hockey player could
argue that a portion of his million-dollar salary is allocable
to the chipped teeth he invariably suffers during his career.
And the same would go for the brain injuries suffered by
football players and the less-noticed bodily damage daily
endured by working men and women on farms and ranches,
in mines, or on fishing boats. We don’t doubt that some por-
tion of the compensation paid all these people reflects the
risk that they will feel pain and suffering, but it’s a risk of
pain and suffering that they agree to before they begin their
work. And that makes it taxable compensation and not
excludable damages.
   Because Perez’s compensation was not ‘‘damages’’ under
section 104(a)(2), we must rule against her on the main issue
in the case.
                       Decision will be entered for respondent.

                        f
