E. Pauline Barnes - Page 8

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          future lost wages, as well as punitive damages.  However, as in             
          the settlement agreement, there is no allocation of monetary                
          damages among the claims.  The petition merely claims damages "in           
          excess of $10,000.00".                                                      
               We must therefore look to the record before us and examine             
          all of the facts and circumstances surrounding the settlement               
          agreement.  Stocks v. Commissioner, 98 T.C. 1 (1992).  The                  
          allocation of the settlement proceeds is a question of fact.                
          Knuckles v. Commissioner, supra at 613.  Based upon our                     
          examination of the record and upon due consideration, we allocate           
          $13,500 to the mental distress claim and $13,500 to the punitive            
          damages claim for the following reasons.                                    
               Petitioner's attorney in the wrongful termination action and           
          settlement, Earl Remmel, testified that during the negotiations             
          with NLCA's defense counsel there was no discussion of past and             
          future lost wages, mental distress, or punitive damages.                    
          However, Mr. Remmel further testified that under the                        
          circumstances of her termination, petitioner had a strong case              
          for mental distress with the likelihood of punitive damages.  He            
          also stated that her opportunity for recovery for future wages              
          was not that good because of her age and health condition.  In              
          addition, petitioner had already been paid for the time she                 
          worked at NLCA plus 1-month's severance.  Although not discussed            
          during settlement negotiations, these factors were no doubt the             
          same ones which motivated NLCA to settle the case.                          

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