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executives, petitioners stressed the importance of the CBD
department but did not indicate that their business reputations
had been injured or that they intended to assert a tort type
claim against IBM. Petitioners have attempted to show that their
business reputations were injured by IBM’s actions. However,
there is no evidence, other than petitioners’ own testimony,
which is not persuasive, that IBM made the MSTP payments to
settle petitioners’ personal injury claims.
We also note that the release form appears to be a standard
document used by IBM for all of its employees who participate in
the MSTP program. Moreover, the fact that the payments were
based on time of service and rate of pay is more indicative of
severance pay rather than a payment for personal injury. See
Sodoma v. Commissioner, supra. Severance pay is taxable income.
In sum, we find that the payments received by petitioners are not
excludable from income.
To reflect the foregoing,
Decisions will be entered
for respondent.
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Last modified: May 25, 2011