T.C. Memo. 2003-339
UNITED STATES TAX COURT
GAVIN POLONE, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 12665-00. Filed December 16, 2003.
P was a high-profile, successful Hollywood talent
agent. P represented numerous Hollywood stars. Until
1996, P worked for a major Hollywood talent agency (U).
On Apr. 21, 1996, U fired P. U leaked P’s
termination to the media. The press coverage of P’s
termination was extensive and defamatory to P.
P immediately hired attorneys to represent him
against U. P’s attorneys prepared a complaint
alleging, among other things, defamation and breach of
contract. P and U engaged in settlement negotiations
that were extremely hostile, adversarial, and
acrimonious. P and U quickly settled P’s claims. U
agreed to pay $4 million to settle the defamation claim
and $2 million plus “back-end” payments to settle the
breach of contract claim. P was paid the $4 million in
four installments of $1 million in May 1996, November
1996, May 1997, and November 1998.
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