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claims without specific allocation to any particular claim,
DaimlerChrysler demonstrated that its purpose for the payment was
not as damages on account of physical injury or physical
sickness.
The ultimate character of the proceeds depends on the
payor’s “dominant reason” for making the payment. Commissioner
v. Duberstein, 363 U.S. 278, 286 (1960); accord Agar v.
Commissioner, 290 F.2d 283, 284 (2d Cir. 1961), affg. per curiam
T.C. Memo. 1960-21. Petitioner did not file her lawsuit against
DaimlerChrysler until after the pinch. Instead of the pinch
being the basis for a separate and stand-alone cause of action,
however, the complaint treats the pinch as a symptom of the
harassment. Similarly, the agreement also references the
“personal injury” as resulting from the harassment.
From the evidence, the Court concludes that it was not
DaimlerChrysler’s intention to compensate petitioner for the
physical injury, in other words, the pinch. Rather, their
purpose and intention was to compensate for the primary cause of
action stated by petitioner in her complaint, the harassment.
The Court “must consider the entire amount taxable” when the
agreement settles claims for different types of damages, does not
allocate the damages, and “there is no other evidence that a
specific claim was meant to be singled out.” Morabito v.
Commissioner, T.C. Memo. 1997-315. The Court finds that the
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