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Petitioners have presented no evidence that a portion of the
award was intended to be excluded. Therefore, the entire amount
must be included in gross income.
Petitioners contend that they were singled out by IBM
because they could have filed age/job discrimination claims.
They contend that IBM purposely intimidated and harassed them in
order to reduce its work force; ultimately they were told to take
the buy-out or risk losing their jobs. They allege that they
were then forced to sign the Release before they were paid. The
ITO II Program paid 2 weeks per year of service versus 1 week per
year under IBM's existing ITO reduction in force program.
Petitioners claim that the additional week represented payment
for personal injury.
While petitioners may or may not have had actionable claims
against IBM, at issue here is the excludability of the ITO II
payments. When petitioners signed the Releases, they had not
brought suits against IBM. There is no evidence that they even
talked to IBM about doing so. Regardless of whether any of them
may have had a bona fide grievance against IBM, each accepted
IBM's offer, which IBM sweetened by adding an extra week's pay to
the formula for computing the amount payable. And although
petitioners may have thought they were settling claims, they
presented no evidence that IBM shared that belief. The ITO II
payments more fully resemble severance pay than settlements.
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Last modified: May 25, 2011