Neil D. and Vy Lubart - Page 9

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          for purposes of this motion only, that petitioners have met the             
          first prong of excludability under section 104(a)(2).                       
               We now turn to the language of the release itself.  The                
          release in this case is the same as that in Brennan v.                      
          Commissioner, T.C. Memo. 1997-317, and in Webb v. Commissioner,             
          T.C. Memo. 1996-50, and essentially the same as that in Sodoma v.           
          Commissioner, supra.  By its terms, petitioner released IBM from            
          liability for both contract and tort claims.  The release,                  
          however, does not specifically indicate that the lump-sum payment           
          received by petitioner was paid to settle a potential personal              
          injury claim against IBM.  We note that where the settlement                
          agreement lacks express language stating what the settlement                
          amount was paid to settle, then the most important factor is the            
          intent of the payor.  Knuckles v. Commissioner, 349 F.2d 610, 612           
          (10th Cir. 1965), affg. T.C. Memo. 1964-33; Stocks v.                       
          Commissioner, supra at 10.  Respondent argues that petitioner's             
          failure to lodge any informal or legal tortlike claim against IBM           
          prior to and at the time of signing the release establishes that            
          there was no bona fide dispute between petitioner and IBM that              
          could provide the basis for settlement.                                     
               To prevail under section 104(a)(2), petitioner is not                  
          required to have asserted a legal claim agaist IBM prior to                 
          signing the release; however, the absence of any knowledge of the           
          claim on the part of the employer-payor obviously has a negative            

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