- 15 -
100 T.C. 93 (1993), affd. 33 F.3d 625 (6th Cir. 1994); Stocks v.
Commissioner, 98 T.C. 1 (1992); Metzger v. Commissioner, 88 T.C.
834 (1987), affd. without published opinion 845 F.2d 1013 (3d
Cir. 1988); Threlkeld v. Commissioner, 87 T.C. 1294 (1986), affd.
848 F.2d 81 (6th Cir. 1988); Bent v. Commissioner, 87 T.C. 236
(1986), affd. 835 F.2d 67 (3d Cir. 1987); Fono v. Commissioner,
79 T.C. 680 (1982), affd. without published opinion 749 F.2d 37
(9th Cir. 1984); Glynn v. Commissioner, supra; Seay v.
Commissioner, 58 T.C. 32 (1972).
Where amounts are received pursuant to a settlement
agreement, the nature of the claim that was the actual basis for
settlement, rather than the validity of the claim, controls
whether such amounts are excludable under section 104(a)(2).
United States v. Burke, 504 U.S. 229, 237 (1992); Robinson v.
Commissioner, supra at 126. Ascertaining the nature of the claim
is a factual determination that is generally made by reference to
the settlement agreement, in light of the facts and circumstances
surrounding it. Knuckles v. Commissioner, 349 F.2d 610, 613
(10th Cir. 1965), affg. T.C. Memo. 1964-33; Seay v. Commissioner,
supra at 37. In this regard, we ask "in lieu of what was the
settlement amount paid"? Bagley v. Commissioner, 105 T.C. 396,
406 (1995). A key factor in that determination is the intent of
the payor, or the payor's dominant reason, in making the payment.
Robinson v. Commissioner, supra at 127; Britell v. Commissioner,
T.C. Memo. 1995-264; see Agar v. Commissioner, 290 F.2d 283, 284
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