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length, was entirely tax-motivated, and did not accurately
reflect the claims at issue in the lawsuit. We agree with
respondent.
The record in this case makes clear that the parties to the
Lindsey settlement were not adversarial with respect to
allocations made in the settlement agreement. The record amply
demonstrates that Lindsey was not concerned with how the
settlement proceeds were allocated between the various claims
asserted against it in the lawsuit. Lindsey's attorney testified
that he did not care how the proceeds were allocated; his only
concern was a release of all claims. Lindsey's attorney
testified that there was no negotiation of the terms of the
allocation, and there is no evidence in the record to suggest
otherwise.
Petitioner argues, in effect, that the allocation was the
product of an adversarial process because Lindsey and petitioner
and CRI were adversaries in a lawsuit which had not been settled
prior to reaching agreement on the allocation. Petitioner
distinguishes the instant case from the facts in Robinson v.
Commissioner, supra, where the parties to the lawsuit had signed
an agreement covering the amount of the settlement prior to
agreeing on an allocation.
We believe petitioner misconstrues the requirement that
allocations in settlement agreements be adversarial. There is
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