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involved with the settlement, and would allocate the total
settlement to such tort-like claims and remedies."
We do not understand why, in light of all the contrary
evidence, the District Court issued such an order. However,
because this order did not result from an adversary proceeding,
we find that it does not accurately reflect the realities of the
parties' settlement. Cf. Robinson v. Commissioner, 102 T.C. 116
(1994) (the allocation in the settlement agreement approved by
the court is not controlling when the allocation itself did not
result from an adversary proceeding); Bagley v. Commissioner, 105
T.C. 396 (1995) (same); Hess v. Commissioner, T.C. Memo. 1998-240
(same).
Although the proceedings prior to the settlement agreement
were certainly adversarial, the parties were no longer
adversaries after they reached a settlement. More than a year
after the settlement, the Plaintiffs desired to have the
settlement payment linked to tort-type injuries received on
account of personal injuries and met with no opposition from the
Defendants. Once the Defendants paid the settlement proceeds
they did not have any interest in how such funds were allocated.
The Plaintiffs requested the District Court to issue such an
order, and with the Defendants not objecting, the District Court
did so.
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