Clarence D. Kightlinger - Page 26

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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           
               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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