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extent any settlement amounts were paid to CRI, we sustain
respondent’s determination, which petitioners have not addressed,
that petitioners received them as constructive dividends.
2. Halliburton Settlement
In the notice of deficiency, respondent determined that
petitioners must include in gross income the full amount of
Halliburton's $200,000 settlement payment. Petitioners contend
that the Halliburton settlement is excludable from their gross
income as it was received by Mr. Burditt on account of personal
injuries.
a. Allocation in the Settlement Agreement
The Halliburton settlement agreement expressly allocated the
full $200,000 settlement solely to Mr. Burditt “for mental
anguish, pain and suffering, damage to his reputation and loss of
good will.” As with the allocation in the Lindsey settlement
agreement, petitioners contend that the allocation in the
settlement agreement is controlling for tax purposes, while
respondent argues that the written allocation should be
disregarded.
We agree with respondent because Halliburton, and petitioner
and CRI, were not adversarial with respect to the allocation in
their settlement agreement. Cf. Robinson v. Commissioner, 102
T.C. 116 (1994). Although Halliburton's attorney initially
rejected the language allocating the entire proceeds to personal
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