Reina Martinez - Page 5

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          in part, revd. in part and remanded 70 F.3d 34 (5th Cir. 1995).             
          The critical question is "in lieu of what was the settlement                
          amount paid?"  Bagley v. Commissioner, 105 T.C. 396, 406 (1995).            
          Determination of the nature of the claim is a factual inquiry.              
          Robinson v. Commissioner, supra at 127.                                     
               The amounts petitioner received under the settlement                   
          agreement were intended to settle petitioner's claim under Title            
          VII.  As a result, the U.S. Supreme Court's decision in United              
          States v. Burke, supra, controls.  In Burke, the Court considered           
          whether amounts received in settlement of a claim under Title VII           
          were excludable under section 104(a)(2).  The Court analyzed                
          Title VII and concluded that it did not provide for remedies to             
          recompense claimants for tort type personal injuries.  Instead,             
          the Court noted that the statute offered only injunctions, back             
          and front pay, and other equitable relief.  Id. at 238-239.  As a           
          result, the Court concluded that Title VII did not redress a tort           
          type personal injury and consequently that settlement proceeds              
          based on such a claim are not excludable under section 104(a)(2).           
               Petitioner contends that Burke is distinguishable.                     
          Petitioner notes that the taxpayers in Burke were employed by the           
          defendant at the time of the discrimination and that the award              
          was essentially for a breach of contract.  Petitioner contends              
          that it was the contractlike violation that led the Court to the            
          conclusion that the Title VII damages were not excludable.  As a            
          result, petitioner contends that, consistent with Burke, an award           

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