Blum v. Commissioner T.C. Memo. 2021-18
On February 18, 2021, the Tax Court issued a Memorandum Opinion in the case of Blum v. Commissioner (T.C. Memo. 2021-18). The primary issue presented in Blum v. Commissioner was whether the petitioner was entitled to exclude from her gross income the $125,000 settlement payment (from a suit against former attorneys who bungled a personal injury lawsuit on petitioner’s behalf) as damages received “on account of personal physical injuries or physical sickness” under IRC § 104(a)(2). Background to Blum v. Commissioner The petitioner went to hospital for knee replacement. She was told to sit in a wheelchair, which turned out to be broken. When the petitioner sat in a wheelchair, she fell, sustaining “significant injuries.” The petitioner hired an attorney who sued the hospital for negligence, and when he retired in the middle of her case, she retained another attorney from the same firm to continue the case. However, the…
