636 F.3d 747 (2011) Isidra Elizabeth ESPINOZA, Petitioner-Appellant, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee. No. 10-60778 Summary Calendar. United States Court of Appeals, Fifth Circuit. March 28, 2011. *748 Isidra Elizabeth Espinoza, San Antonio, TX, pro se. John A. Nolet, Jonathan S. Cohen, John DiCicco, U.S. Dept. of Justice, Tax Div., App. Section, Clarissa C. Potter, IRS, Washington, DC, for CIR. Before WIENER, PRADO, and OWEN, Circuit Judges. PRADO, Circuit Judge: At issue in this appeal is whether a $50,000 lump-sum payment to "resolve and settle all differences, disputes, and controversies between the parties" in an action concerning various employment-related claims was excludable from a taxpayer's income under Internal Revenue Code § 104(a)(2). The Tax Court held that the taxpayer, Petitioner-Appellant Isidra Elizabeth Espinoza, had not met her burden of establishing that the payor, the Texas Health and Human Services Commission ("THHSC"), had agreed to pay this settlement amount on account of personal physical injuries or physical sickness such that Espinoza properly excluded the $50,000 from her 2006 federal income. Accordingly, the Tax Court determined that Espinoza was liable for $9,078 in tax deficiency as determined by the Respondent-Appellee Commissioner of the Internal Revenue Service ("Commissioner"). We agree and affirm the Tax Court's decision. FACTS AND PROCEDURAL BACKGROUND From 1990 to 2002, Espinoza was employed by THHSC, formerly known as the Texas Department of Human Services. In December 1997, Espinoza filed suit against THHSC for discrimination based on gender, religion, and national origin, as well as retaliation. Espinoza sought both compensatory and exemplary relief for actual damages, back pay, mental pain and anguish, and intentional infliction of emotional distress. In the fall of 2005, with Espinoza in poor health, Espinoza's husband discussed with Espinoza's personal injury lawyer, Jesus Villabolos, the possibility of approaching THHSC with a settlement offer. Calculating the total cost of Espinoza's *749 medical bills for the physical and psychological ailments that had been caused or exacerbated by the workplace discrimination to be $50,000, Espinoza's husband asked Villabolos to convey this settlement offer to THHSC. During this discussion, Villabolos represented to Espinoza's husband that the settlement amount would not be taxable. Villabolos made the offer to settle for $50,000 to THHSC's attorney. By January 27, 2006, THHSC and Espinoza had executed a release and settlement agreement. The agreement stated that the "agreement is entered into to resolve and settle all differences, disputes, and controversies between the parties, to compromise and settle doubtful and disputed claims, to avoid further litigation, and to facilitate peace." THHSC agreed to pay a total amount of $50,000 "[i]n full and final settlement and compromise of all claims, but without admitting liability." In 2006, Espinoza received the lump-sum payment along with a Form 1099-MISC from THHSC. On May 10, 2007, Espinoza filed her federal income tax return for tax year 2006. The return was prepared by a Certified Public Accountant ("CPA"). After being told by Espinoza's husband that the $50,000 settlement amount was for medical costs, the CPA informed the Espinozas that the settlement …
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