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Commissioner, supra.2 By its terms, Mr. Carey released IBM from
liability for both contract and tort claims, except those claims
arising after the date of signature. The release makes no
allocation of the lump-sum payment. The record herein reflects
no basis for any such allocation.
Finally, as in the other IBM payment cases, the amount of
Mr. Carey's lump-sum payment was calculated on length of service
and salary. The release states that if Mr. Carey were rehired by
IBM, he could be required to repay some portion of the lump-sum
payment based on the number of weeks off the IBM payroll compared
with the number of weeks' salary used to calculate the lump-sum
payment. As in Keel v. Commissioner, T.C. Memo. 1997-278, Sodoma
v. Commissioner, supra, and Webb v. Commissioner, T.C. Memo.
1996-50, the lump-sum payment herein appears to have been
severance pay rather than a payment for personal injury.
Severance pay, just like the pay it replaces, is taxable income.
We hold that the lump-sum payment is not excludable from
gross income under section 104(a)(2). Accordingly,
Respondent's motion for
summary judgment will be granted
and decision will be entered for
respondent.
2 See also Adams v. Commissioner, T.C. Memo. 1997-357; Keel v.
Commissioner, T.C. Memo. 1997-278.
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