Joyce M. and Thomas J. Hamm - Page 14

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          section 104(a)(2) because the ITO II program was "designed to               
          avoid prosecution of a legal suit or action based upon tort or              
          tort-type rights".6  Petitioners allege that, because employees             
          who filed claims within 7 days of signing the ITO II agreement              
          had to return any settlement payments, the settlement payment was           
          made to avoid tort type litigation.  Alternatively, petitioners             
          contend that Ms. Allman caused injury to petitioners by coercing            
          petitioner to sign up for the ITO II program and to terminate               
          from IBM.  Additionally, petitioners allege that, as a result of            
          having to sign up for the ITO II program and to terminate                   
          employment with IBM through coercion and duress, petitioner had             
          to accept a minimum-wage position to start a new career, suffered           
          periods of unemployment, assumed debts totaling $25,000, and                
          experienced great personal and family stress.  As a final                   
          alternative, petitioners contend that they would have suffered              
          even greater injury by filing "a claim against IBM instead of               
          accepting the ITO II settlement".                                           
               Petitioners' allegations are merely conclusions and not                
          specific allegations of fact that, if true, would support a                 
          finding that the ITO payment was for personal injury or sickness            
          as required by section 104(a)(2).  For purposes of the instant              

          6    Additionally, we note that, in their petition, petitioners             
          contested the deficiency on the grounds that the ITO payment "was           
          made, under taxpayer duress, as consideration to the taxpayer for           
          release of employer for any claim the taxpayer may have against             
          employer for age discrimination and other potential tort claims."           

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