Richard A. and Janice S. Adams - Page 3

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               When petitioner left IBM, he received a lump-sum payment of            
          $36,105.50 pursuant to the terms of an IBM U.S. Marketing and               
          Services Company Transition Payment Program (MSTP).  In order to            
          receive the MSTP petitioner was required to execute a "General              
          Release and Covenant Not To Sue" (the Release).  Under the                  
          Release, in consideration for the MSTP, petitioner                          
               agrees to release * * * [IBM] and its benefits plans                   
               from all claims, demands, actions or liabilities you                   
               may have against IBM of whatever kind, including but                   
               not limited to those which are related to your                         
               employment with IBM, the termination of that employment                
               or other severance payments or your eligibility or                     
               participation in the Retirement Bridge Leave of                        
               Absence. * * * You also agree that this release covers,                
               but is not limited to, claims arising from the Age                     
               Discrimination in Employment Act of 1967, as amended,                  
               Title VII of the Civil Rights Act of 1964, as amended,                 
               and any other federal, state or local law dealing with                 
               discrimination in employment, including but not limited                
               to discrimination based on sex, race, national origin,                 
               religion, disability, veteran status or age.  You also                 
               agree that this release includes claims based on                       
               theories of contract or tort, whether based on common                  
               law or otherwise.                                                      
          Petitioner suffered no injury or sickness at the time that he was           
               Petitioners did not include the $36,105.50 in their taxable            
          income for 1993.  Petitioners, however, attached a Form 8275,               
          Disclosure Statement, and a copy of the Release to their joint              
          Federal income tax return for 1993.  These documents reflect the            
          facts of the payment.  Upon examination, respondent determined              
          that the $36,105.50 was includable in gross income.                         

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