John A. Schmitz, Mary B. Schmitz v. Commissioner of Internal Revenue

Opinion by Judge GOODWIN; Concurrence by Judge TROTT.

GOODWIN, Circuit Judge:

The Commissioner appeals a tax court summary judgment granted in favor of taxpayers John and Mary Schmitz. The Commissioner argues that damages the Schmitzes received in settlement of an Age Discrimination in Employment Act (“ADEA”), 29 U.S.C. §§ 621 et seq., lawsuit are taxable income. The tax court held that the Schmitzes’ ADEA settlement was excludable from gross income as “damages received ... on account of personal injuries or sickness.” 26 U.S.C. § 104(a)(2) (1988). We affirm.

I

John Schmitz is a former employee…