John C. Dewey, Plaintiff-appellee, v. United States of America, Internal Revenue Service,defendants-appellants, 82 F.3d 425 (10th Cir. 1996)

This appeal arises from the district court's order of summary judgment in favor of plaintiff. Plaintiff received a judgment against his former employer as a result of a lawsuit he filed in state court under the Age Discrimination in Employment Act (ADEA). Thereafter, plaintiff included the entire amount of the ADEA award in his gross income on his annual tax return. Ultimately, plaintiff filed suit in the district court for a refund of $45,890.05, claiming that the entire ADEA award was excludable from income. Plaintiff also complained that the IRS conducted an illegal second examination of his 1984 tax year.

The district court found that plaintiff's ADEA damages were excludable from income under 26 U.S.C. 104(a) (2) as damages received "on account of personal injuries or sickness." Because of this finding in favor of plaintiff, the district court did not address the issue of the second examination of plaintiff's 1984 tax year.

After the district court entered summary judgment in this case, the Supreme Court decided Commissioner v. Schleier, 115 S. Ct. 2159 (1995). Because the district court did not have the benefit of the Supreme Court's Schleier decision when it entered summary judgment in this case, we reverse and remand to the district court for further consideration of this case in light of that decision. Additionally, the district court should consider on remand the legality of the second examination of plaintiff's 1984 tax year and the proper treatment of the interest and litigation costs portion of the ADEA award.

The judgment of the United States District Court for the District of Wyoming is REVERSED and REMANDED for further proceedings consistent with this order and judgment.