- 12 - extent that he did, the funds are excludable from his gross income. Sec. 104(a)(2). To the extent that he did not, the funds are includable in his gross income. Sec. 61(a). Because respondent determined that none of the proceeds are excludable from petitioner's gross income under section 104(a)(2), petitioner must prove otherwise. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933); Robinson v. Commissioner, 102 T.C. 116, 124 (1994), affd. in part, revd. in part on an issue not relevant herein and remanded 70 F.3d 34 (5th Cir. 1995). Petitioner argues that the settlement proceeds are excludable from his gross income because the settlement agreement states explicitly that he received the proceeds for a personal injury. Petitioner alleges that his litigation with Balfour was adversarial and that he entered into the allocation set forth in the settlement agreement to "maximize his relatively meager recovery". Petitioner alleges that his cause of action against Balfour for constructive discharge was real. Respondent argues that none of the $425,000 is excludable from petitioner's gross income because none of it was paid to him for a personal injury. Respondent argues that the allocation set forth in the settlement agreement should be disregarded because it was not the product of arm's-length negotiations between Balfour and petitioner.Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Next
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