- 9 -
We now turn to the language of the release itself. The
release in this case is the same as that in Brennan v.
Commissioner, T.C. Memo. 1997-317, and in Webb v. Commissioner,
T.C. Memo. 1996-50, and essentially the same as that in Sodoma v.
Commissioner, supra. By its terms, petitioner released IBM from
liability for both contract and tort claims. The release,
however, does not specifically indicate that the lump-sum payment
received by petitioner was paid to settle a potential personal
injury claim against IBM. We note that where the settlement
agreement lacks express language stating what the settlement
amount was paid to settle, then the most important factor is the
intent of the payor. Knuckles v. Commissioner, 349 F.2d 610, 612
(10th Cir. 1965), affg. T.C. Memo. 1964-33; Stocks v.
Commissioner, supra at 10. Respondent argues that petitioner's
failure to lodge any informal or legal tortlike 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.
To prevail under section 104(a)(2), petitioner is not
required to have asserted a legal claim against IBM prior to
signing the release; however, 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.
Brennan v. Commissioner, supra; Sodoma v. Commissioner, supra;
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
Last modified: May 25, 2011