- 8 - In this case, petitioner's interest expenses arose out of the settlement of his lawsuit with DHHS. The settlement agreement was entered into to determine the respective rights of the parties as a result of petitioner's declaratory judgment lawsuit.4 Petitioner correctly points out that the 1987 settlement agreement is a completely new contract between petitioner and DHHS. But the fact that a new contract has been entered does not affect the nature of the claim. We must look behind this new agreement to the underlying claim which brought about the settlement. The lawsuit itself was the reason for the settlement and subsequent interest payments, so we must examine the underlying nature of the lawsuit to determine whether it has a business origin. The underlying claim of the lawsuit between petitioner and DHHS relates to the NHSC scholarship contract. Therefore, the interest payments were made pursuant to the settlement of this contract dispute. The NHSC contract provided that petitioner would receive scholarship tuition from DHHS in exchange for his promise to serve as an employee of DHHS for a term of years following graduation. Generally, education expenditures are 4Petitioner argues that his primary motive in settling the lawsuit with DHHS was to eliminate the chance that he would have to interrupt his medical practice to perform services for DHHS. The record, however, indicates that this was not a realistic possibility. DHHS sought from petitioner money damages, not specific performance.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011