Lance R. and Elaine C. LeFleur - Page 19

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            compensate him for his losses, he also desired that the other                             
            party be punished for its behavior.  However, the settlement                              
            agreement stated affirmatively that no amount was paid to the                             
            taxpayer to satisfy damages under RICO or to satisfy punitive                             
            damages claims.  The taxpayer was never given free reign to                               
            structure the settlement allocation.  See also Fono v.                                    
            Commissioner, 79 T.C. at 694 (express allocation made in an                               
            earlier settlement agreement between Quaker Oats Co. (Quaker) and                         
            taxpayers was upheld as one entered into at arm's length and in                           
            good faith.  The taxpayers sought an allocation of a portion of                           
            the agreed payment to personal injury--"damages for emotional                             
            distress"--but Quaker emphatically rejected that request.);                               
            McShane v. Commissioner, supra (express language in settlement                            
            agreement was respected where evidence in the record established                          
            that the inclusion of the language in the settlement agreements                           
            was the result of bona fide arm's-length negotiations and the tax                         
            consequences of the settlement were "never considered in the                              
            negotiations, but instead the settlement amounts were arrived at                          
            solely from a consideration by each party of the risks it would                           
            be subjected to by continuing the appeal.").                                              
                  While not identical, we think that the facts of the instant                         
            case are similar to those of Robinson v. Commissioner, 102 T.C.                           
            116 (1994), and Bagley v. Commissioner, 105 T.C. 396 (1995), and                          
            are distinguishable from those of McKay v. Commissioner, supra,                           
            McShane v. Commissioner, supra, and Fono v. Commissioner, 79 T.C.                         

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