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contrast with petitioner's argument that Balfour paid him the
settlement as compensation for a personal injury, we find that
Balfour's dominant reason for paying the settlement was to
compensate petitioner for commissions which Balfour could be
called upon to pay him in the event he prevailed in the District
Court suit.
Petitioner focuses only on the settlement agreement and asks
the Court to do likewise. We decline to do so. In Robinson v.
Commissioner, supra, the taxpayers sued a State bank for failing
to release a lien on their property. After the jury returned a
verdict in their favor for approximately $60 million, including
$6 million for lost profits, $1.5 million for mental anguish, and
$50 million in punitive damages, the parties to that proceeding
settled. In the final judgment reflecting the settlement, which
was drafted by the parties and signed by the trial judge,
95 percent of the settlement proceeds was allocated to mental
anguish and 5 percent was allocated to lost profits. We held
that this allocation did not control the taxability of the
proceeds to the taxpayers. We noted that the allocation was
"uncontested, nonadversarial, and entirely tax motivated", and
that it did not accurately "reflect the realities of * * * [the
parties'] settlement." Id. at 129.
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