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whether Mr. D’Amico’s alleged injuries were personal in nature
and, if so, whether the settlement amounts in dispute were
received on account of those injuries.
We turn first to the $10,000 payment which the Company made
to Mr. D’Amico under the settlement agreement for the covenants
of secrecy, the release, and the other covenants and obligations
to which Mr. D’Amico agreed. On the present record, we find that
petitioners have failed to show what portion of the $10,000
payment was made for the covenants of secrecy, what portion was
paid for the release, and what portion was paid for the other
covenants and obligations.5
Assuming arguendo that petitioners had established what
portion of the $10,000 payment was attributable to the covenants
of secrecy, any such portion was paid by the Company to Mr.
D’Amico for his covenant, as set forth in section 5 of the
settlement agreement, not to divulge any trade secrets and
similar confidential matters that he learned as an employee of
the Company. On the record before us, we find that petitioners
have failed to establish that any such portion was paid on
5According to petitioners’ 1994 return, the Company
reflected the $10,000 payment, as well as certain other payments
totaling $73,518, that the Company made to and on behalf of Mr.
D’Amico pursuant to the settlement agreement in one or more Forms
1099 relating to the settlement agreement that it issued to him.
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