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When petitioner left IBM, he received a lump-sum payment of
$36,105.50 pursuant to the terms of an IBM U.S. Marketing and
Services Company Transition Payment Program (MSTP). In order to
receive the MSTP petitioner was required to execute a "General
Release and Covenant Not To Sue" (the Release). Under the
Release, in consideration for the MSTP, petitioner
agrees to release * * * [IBM] and its benefits plans
from all claims, demands, actions or liabilities you
may have against IBM of whatever kind, including but
not limited to those which are related to your
employment with IBM, the termination of that employment
or other severance payments or your eligibility or
participation in the Retirement Bridge Leave of
Absence. * * * You also agree that this release covers,
but is not limited to, claims arising from the Age
Discrimination in Employment Act of 1967, as amended,
Title VII of the Civil Rights Act of 1964, as amended,
and any other federal, state or local law dealing with
discrimination in employment, including but not limited
to discrimination based on sex, race, national origin,
religion, disability, veteran status or age. You also
agree that this release includes claims based on
theories of contract or tort, whether based on common
law or otherwise.
Petitioner suffered no injury or sickness at the time that he was
retired.
Petitioners did not include the $36,105.50 in their taxable
income for 1993. Petitioners, however, attached a Form 8275,
Disclosure Statement, and a copy of the Release to their joint
Federal income tax return for 1993. These documents reflect the
facts of the payment. Upon examination, respondent determined
that the $36,105.50 was includable in gross income.
Discussion
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Last modified: May 25, 2011