Lance R. and Elaine C. LeFleur - Page 14

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            expressly allocated that amount to the tort claim for personal                            
            injuries.  In support of their position, petitioners cite Glynn                           
            v. Commissioner, 76 T.C. 116, 120 (1981), affd. without published                         
            opinion 676 F.2d 682 (1st Cir. 1982), in which we stated that the                         
            most important fact in determining the purpose of the payment is                          
            "express language [in the agreement] stating that the payment was                         
            made on account of personal injuries."  Petitioners further                               
            maintain that the settlement agreement should be respected by                             
            this Court because it was entered into in good faith between                              
            adverse parties at arm's length.  On the other hand, respondent                           
            contends that no part of the settlement proceeds qualifies for                            
            exclusion as "damages received * * * on account of personal                               
            injuries" under section 104(a)(2).  On that basis, respondent                             
            maintains that the entire amount of the settlement proceeds, or                           
            $1 million, is includable in petitioners' gross income.                                   
            Respondent posits that the express allocation of the proceeds in                          
            the settlement agreement should be disregarded since the                                  
            agreement was not entered into by the parties in an adversarial                           
            context at arm's length and in good faith.  For the reasons set                           
            forth below, we agree with respondent.                                                    
                  We have had numerous opportunities to address the issue of                          
            the proper allocation of the proceeds of a settlement agreement                           
            in the context of section 104(a)(2).  See, e.g., Robinson v.                              
            Commissioner, 102 T.C. 116 (1994), affd. in part, revd. in part                           
            and remanded 70 F.3d 34 (5th Cir. 1995); Horton v. Commissioner,                          

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