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680 (1982). While the underlying litigation was certainly
adversarial, by the time the settlement agreement was executed on
December 2, the parties were no longer adversaries. See Robinson
v. Commissioner, supra at 133. An agreement in principle had
already been reached on Thanksgiving Day, and was expressly
referred to in the settlement agreement. The record reflects
that Blount was not concerned with the amount of the settlement
proceeds that was allocated to tortlike personal injury damages
vis-a-vis other damages. As a result, petitioner in effect was
able to unilaterally allocate the proceeds. The defendant's only
concerns were that all of petitioner's claims be settled and that
nothing be done to compromise the deductibility of the settlement
to Blount. While not controlling, the deductibility of the
payor's payment is a factor to be considered in determining
whether the parties have adverse interests in regard to their
allocations. See McKay v. Commissioner, 102 T.C. at 485.
Indeed, we agree with respondent that, to the extent that such an
allocation resulted in a larger net recovery to petitioner and
had no corresponding negative impact on Blount, such allocation
was equally favorable to Blount in that it aided its ability to
resolve the lawsuit for the smallest settlement payment amount
possible.
Moreover, as in Robinson v. Commissioner, supra at 129, and
Bagley v. Commissioner, supra at 409, but unlike McKay v.
Commissioner, supra at 472, the allocation did not accurately
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