Ferdinand A. & Marla Morabito, et al. - Page 7

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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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