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settlement. We agree with respondent that the ITO payment is not
excludable from petitioners' gross income.
Petitioners do not allege, nor does the record otherwise
show, that petitioner ever made any formal or informal claim
against IBM. It therefore appears that there was no settlement
for IBM and petitioner to reach.
However, even if we assume that the executed Release
represents a settlement agreement, then for the payment to be
excludable, petitioners must show that the payment is based upon
(1) tort or tort-type rights, and (2) on account of personal
injuries or sickness.
We now turn to the language of the release itself. The
release in this case is the same as that in Webb v. Commissioner,
T.C. Memo. 1996-50, and essentially the same as that in Sodoma v.
Commissioner, supra. By its terms, petitioner released IBM from
liability for both contract and tort claims. The release,
however, does not specifically indicate that the lump-sum payment
received by petitioner was paid to settle a potential personal
injury claim against IBM. We note that when the settlement
agreement lacks express language stating what the settlement
amount was paid to settle, then the most important factor is the
intent of the payor. Knuckles v. Commissioner, 349 F.2d 610, 612
(10th Cir. 1965), affg. T.C. Memo. 1964-33; Stocks v.
Commissioner, supra at 10. Here, respondent contends, and we
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