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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 need not
have been previously asserted, the absence of any knowledge of
the claim on the part of the employer-payor obviously has a
negative impact in determining the requisite intent of the
payment. Sodoma v. Commissioner, T.C. Memo. 1996-275; see also
Keel v. Commissioner, T.C. Memo. 1997-278; Foster v.
Commissioner, T.C. Memo. 1996-26.
Petitioner asserts that he had a bona fide claim against IBM
for infliction of emotional distress caused by his travel
schedule and pressures at work, and therefore IBM accepted
petitioner's ITO II Program participation request and subsequent
release in lieu of litigation. Petitioner claims that his
position is supported by the fact that he filed informal claims
and/or grievances against IBM pursuant to the company's own
internal programs (e.g., Open Door Policy). Respondent argues
that petitioner's failure to lodge any formal tort-type claim
against IBM prior to and at the time of signing the release
establishes that there was no bona fide dispute between
petitioner and IBM that could provide the basis for settlement.
We disagree. An employee is not always required to file a
formal legal action against an employer prior to settling an
existing claim in order to exclude such settlement payment from
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