- 9 -
396, 406 (1995); Bent v. Commissioner, 87 T.C. 236, 244 (1986),
affd. 835 F.2d 67 (3d Cir. 1987). Determination of the nature of
the claim is a factual inquiry. Robinson v. Commissioner, 102
T.C. 116, 127 (1994), affd. in part, revd. in part and remanded
70 F.3d 34 (5th Cir. 1995).
Petitioners first argue that the State Farm payment was made
to settle a claim of tortious discrimination under California and
Federal law. We disagree. In the instant case, although the
settlement agreement does not contain a specific reference to
title VII, the surrounding circumstances convince us that,
pursuant to the settlement agreement, the State Farm payment was
made to settle a claim under title VII. Petitioner was a
claimant in a class action suit that alleged discrimination under
title VII and sought backpay and injunctive and declaratory
relief. The District Court ruled that State Farm was liable
under title VII to all members of the class who had been
discriminated against and ordered individual hearings.
Subsequently, petitioner and State Farm entered into a
settlement agreement pursuant to which State Farm paid $206,739
to petitioner for petitioner's release of a claim "arising out of
or relating to any alleged discriminatory, improper, or unlawful
act or omission of State Farm in connection with * * *
recruitment, selection, hiring, job assignment, job transfer,
training, promotion, or termination". Additionally, the
settlement agreement expressly stated that it includes "the
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