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expensive, if not administratively impossible, resulting in a
smaller recovery to each plaintiff. The pro rata distribution
was a practical, commonsense solution under the circumstances.
Petitioners rely on Seay v. Commissioner, 58 T.C. 32 (1972).
There the taxpayer received a settlement of $105,000 for breach
of contract and personal injuries arising from embarrassing
publicity. The settlement allocated different amounts to the
various plaintiffs for salary but identical amounts for personal
injury. A letter confirming the distribution of the settlement
funds was signed by the principal negotiators from both sides.
The letter stated that the settlement consisted of salary
($60,000 for Mr. Seay) and additional sums to compensate the
parties for "personal embarrassment, mental and physical strain
and injury to health and personal reputation in the community".
Id. at 35. We held that the letter helped to establish that the
nature of the claim was for personal injuries, the additional
$45,000 should be excluded from gross income, and only $60,000
should be recognized as salary and ordinary income.
Here, Roll, the banks' chief negotiator, testified that the
money was paid "not for the value of milk, but for the value, if
you will, of the emotional distress claims asserted by these
individual producer plaintiffs."
Respondent points to the lack of an adversarial relationship
between the Bank Defendants and petitioners in structuring the
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