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type damages. Alternatively, petitioners argue that petitioner's
claim was based upon tort or tort type rights because there is no
evidence in the settlement agreement that State Farm intended to
award backpay or any other pay. Additionally, petitioners argue
that, as section A of exhibit 9 to the consent decree recognizes
damages other than title VII damages, petitioner's claim was
based upon tort or tort type rights.
Where amounts are received pursuant to a settlement
agreement, the nature of the claim that was the actual basis for
settlement controls whether such amounts are excludable from
gross income pursuant to section 104(a)(2). United States v.
Burke, supra at 237. The critical question is "in lieu of what
were damages awarded" or paid. Bagley v. Commissioner, 105 T.C.
396, 406 (1995); Bent v. Commissioner, 87 T.C. 236, 244 (1986),
affd. 835 F.2d 67 (3d Cir. 1987). Determination of the nature of
the claim is a factual inquiry. Robinson v. Commissioner, 102
T.C. 116, 127 (1994), affd. in part, revd. in part and remanded
70 F.3d 34 (5th Cir. 1995).
Petitioners' first argument is that the State Farm payment
could only represent tort or tort type damages because petitioner
was never an employee or trainee of State Farm. We disagree.
The District Court found State Farm liable with respect to "all
female applicants and deterred applicants who, at any time since
July 5, 1974, have been, are, or will be denied recruitment,
selection and/or hire as trainee agents by defendant companies
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