Clarence D. Kightlinger - Page 15

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               identical language from the Clayton Act on which the RICO              
               statute was patterned.  The Court concluded that Congress              
               intended the phrase "business or property" to exclude                  
               personal injuries.  Id. at 339, 99 S.Ct. at 2331.                      
           A.  The Settlement Agreement                                               
               In the case before us, petitioner received a portion of the            
          recovery in a class action pursuant to a settlement agreement.              
          When damages are received pursuant to a settlement agreement, the           
          nature of the claim that was the actual basis for settlement                
          controls whether such damages are excludable under section                  
          104(a)(2).  United States v. Burke, supra; Thompson v.                      
          Commissioner, 866 F.2d 709, 711 (4th Cir. 1989), affg. 89 T.C.              
          632 (1987); Robinson v. Commissioner, supra.  Determination of              
          the nature of the claim is factual.  Bagley v. Commissioner,                
          supra; Stocks v. Commissioner, 98 T.C. 1, 11 (1992). "[T]he                 
          critical question is, in lieu of what was the settlement amount             
          paid."  Bagley v. Commissioner, supra at 406.  Therefore, the               
          intent of the payor is the most important factor.  Knuckles v.              
          Commissioner, 349 F.2d 610, 612 (10th Cir. 1965), affg. T.C.                
          Memo. 1964-33; Robinson v. Commissioner, supra; Stocks v.                   
          Commissioner, supra at 10.                                                  
               We first consider the settlement agreement in deciding the             
          intent of the payor in paying the settlement proceeds.  See                 
          Robinson v. Commissioner, supra.  The joint stipulation of                  
          settlement involved herein did not specifically allocate the                

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