Joyce M. and Thomas J. Hamm - Page 10

                                       - 10 -                                         
          found, any authority for the proposition that the taxpayer must             
          file a claim prior to the settlement agreement in order for the             
          settlement proceeds to qualify for the exclusion.  Accordingly,             
          we reject respondent's argument that the failure to file a claim            
          prior to signing the release precludes exclusion of the ITO                 
          payment from gross income pursuant to section 104(a)(2).                    
               We do note, however, that the failure to file such a claim             
          may be taken into account in deciding whether the taxpayer                  
          released a tort or tort type claim.  See Webb v. Commissioner,              
          T.C. Memo. 1996-50.  Additionally, we have specifically stated              
          that a claim need not have been previously asserted against the             
          employer, although the absence of any knowledge of the claim on             
          the part of the employer-payor has a negative impact in                     
          concluding whether the employer-payor had the requisite intent of           
          making the payment "on account" of a personal injury.  Keel v.              
          Commissioner, T.C. Memo. 1997-278; Sodoma v. Commissioner, T.C.             
          Memo. 1996-275.                                                             
               Based on our review of the facts and circumstances in the              
          instant record, we conclude that the ITO payment was severance              
          pay to petitioner and not settlement proceeds for the release of            
          tort or tort type claims.  Several considerations support our               
          conclusion.  On July 28, 1992, petitioner was informed that the             
          project to which he was assigned would no longer be funded after            
          October 1992 and that he should find another position within IBM            
          or sign up for the ITO II program.  On July 31, 1992, after 2               

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  Next

Last modified: May 25, 2011