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no settlements for IBM and petitioners to reach. Petitioners
"waived all claims before asserting them, so this cannot be a
damage settlement by definition." Taggi v. United States, 835 F.
Supp. 744, 746 (S.D.N.Y. 1993), affd. 35 F.3d 93 (2d Cir. 1994).
However, even if we assume that the signed Releases
represent settlement agreements, for the awards to be excludable
under section 104(a)(2), petitioners must demonstrate (1) "that
the underlying cause of action giving rise to the recovery is
'based upon tort or tort type rights'" and (2) "that the damages
were received 'on account of personal injuries or sickness.'"
Commissioner v. Schleier, 515 U.S. 323, 337 (1995).
1. Underlying cause of action
The nature of the claim controls whether a damage amount is
excludable from gross income. Stocks v. Commissioner, 98 T.C. 1,
10 (1992). Determining the nature of the claim is a factual
matter. Sodoma v. Commissioner, T.C. Memo. 1996-275. If there
is no express language in the agreement explaining why the
settlement amount is being paid, the most important factor is
"the intent of the payor". Stocks v. Commissioner, supra.
The best indicator of the intent of the payor in this case
is the language of the Release. The Release freed IBM from "all
claims, demands, actions or liabilities you may have against IBM
which are related to your employment with IBM or the termination
of that employment." The Release covered ADEA claims, employment
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