Robert C. Sodoma and Gwen A. Sodoma - Page 6

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          are excludable under section 104(a)(2).  United States v. Burke,            
          504 U.S. 229, 237 (1992); Robinson v. Commissioner, 102 T.C. 116,           
          126 (1994), affd. in part, revd. in part 70 F.3d 34 (5th Cir.               
          1995).  "[T]he critical question is, in lieu of what was the                
          settlement amount paid?"  Bagley v. Commissioner, supra at 406.             
               Determination of the nature of the claim is factual.  Bagley           
          v. Commissioner, supra; Stocks v. Commissioner, 98 T.C. 1, 11               
          (1992).  The most important element is the intent of the payor.             
          Robinson v. Commissioner, supra at 127.                                     
               Essential to petitioner's ability to satisfy the first                 
          requirement is the existence of a claim "based upon tort or tort            
          type rights".  See supra p. 5.  The parties and the amicus curiae           
          have advanced extensive arguments as to whether such a claim must           
          have been a valid claim that was asserted prior to the                      
          settlement.  We are satisfied that the only requirement is that             
          there be a claim which is bona fide, not necessarily valid, i.e.,           
          sustainable.  Taggi v. United States, 35 F.3d 93, 96 (2d Cir.               
          1994); Robinson v. Commissioner, supra at 126; Stocks v.                    
          Commissioner, supra at 10.  In this connection, we note that we             
          have held that claims for potential future personal injuries do             
          not qualify for exclusion under section 104(a).  Roosevelt v.               
          Commissioner, 43 T.C 77 (1964); Starrels v. Commissioner, 35 T.C.           
          646 (1961), affd. 304 F.2d 574 (9th Cir. 1962). Such holdings               
          imply that there must be an existing claim.  Moreover, while it             

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