t c memo united_states tax_court ann mckinney petitioner v commissioner of internal revenue respondent docket no filed date ann mckinney pro_se sheida lahabi janet f appel and derek w kelley for respondent memorandum findings_of_fact and opinion nega judge respondent determined a deficiency in petitioner’ sec_2011 federal_income_tax of dollar_figure the issue for decision is whether dollar_figure of 1unless otherwise indicated all section references are to the internal_revenue_code in effect for the year at issue and all rule references are to the tax continued settlement proceeds that petitioner received under a settlement agreement and release settlement agreement with her former employer the u s department of the interior u s geological survey agency is excludable from her gross_income under sec_104 findings_of_fact some of the facts are stipulated and are so found the stipulation of facts and the attached exhibits are incorporated herein by this reference petitioner resided in massachusetts when the petition was filed petitioner was an employee of agency from until her retirement on date on date petitioner filed a complaint of discrimination complaint with the equal employment opportunity commission against agency alleging discrimination and a hostile work environment on the bases of age and physical disability after her retirement petitioner expanded the bases of her complaint to include constructive discharge and thereafter filed an appeal of her claims with the merit systems protection board mspb on date petitioner and agency entered into a settlement agreement pursuant to which she agreed to withdraw her complaint and appeal continued court rules_of_practice and procedure before the mspb and agency agreed to pay her a lump sum of dollar_figure the settlement agreement states that petitioner agrees to be responsible for the tax consequences of the lump sum payment on date agency filed with the internal_revenue_service form 1099-misc miscellaneous income for tax_year reporting the payment of dollar_figure of nonemployee compensation to petitioner petitioner timely filed her form_1040 u s individual_income_tax_return and on date filed form 1040x amended u s individual_income_tax_return amending her initial return for tax_year petitioner failed to report receipt of the dollar_figure lump-sum payment on either filed return on date respondent sent petitioner a notice_of_deficiency for tax_year determining a deficiency of dollar_figure because of petitioner’s failure to report the dollar_figure lump-sum payment as income petitioner timely filed a petition for redetermination opinion sec_61 defines gross_income as all income from whatever source derived exclusions from gross_income must be narrowly construed 515_us_323 citing 504_us_229 souter j concurring sec_104 provides that gross_income does not include the amount of any damages received on account of personal physical injuries or physical sickness for purposes of determining whether damages received pursuant to a written settlement agreement are excludable under sec_104 we look to the nature of the claim settled burke u s pincite the nature of the claim is determined first by looking to the settlement agreement itself for indicia of its purpose 207_f3d_322 6th cir where the settlement agreement lacks express statements of purpose we then look beyond the agreement to other evidence indicating the intent of the payor as to the purpose in making the payment such as but not limited to the amount_paid the factual circumstances that led to the settlement agreement and the allegations in the payee’s complaint and amended complaint id quoting 349_f2d_610 10th cir aff’g t c memo 102_tc_116 aff’d in part rev’d in part and remanded on another issue 70_f3d_34 5th cir the commissioner’s determination in a notice_of_deficiency is presumed correct and the taxpayer bears the burden of proving that the determination is erroneous rule a 290_us_111 if the taxpayer presents objective and credible_evidence of the payor’s intent the burden_of_proof may shift to the commissioner sec_7491 the settlement agreement between petitioner and agency does not provide any indicia as to whether the dollar_figure payment or any portion thereof was made pursuant to a claim of personal physical injuries or physical sickness further notwithstanding her testimony petitioner has not satisfied her burden of introducing objective and credible_evidence that the dollar_figure payment was made in lieu of damages for personal physical injuries or physical sickness see 141_tc_331 quoting 79_tc_680 aff’d without published opinion 749_f2d_37 9th cir aff’d ___ f app’x ___ wl 9th cir date we conclude that the damages agency paid petitioner as part of the settlement agreement were for the resolution and withdrawal of her constructive discharge and discrimination claims and not on account of personal physical injuries or physical sickness therefore the dollar_figure payment she received pursuant to the settlement agreement is includible in her income for and is not excludable under sec_104 to reflect the foregoing decision will be entered for respondent