- 7 -
disability plan and paid all the premiums. Petitioners did not
include the premiums in income. Thus, the application of section
105(a) turns on whether the first condition is met; i.e., whether
the lump-sum payment constitutes “amounts received * * * through
accident or health insurance”.4
Petitioners argue that the $135,000 lump sum petitioner
received from UNUM was not paid under the disability plan.
Petitioners base their argument on the assertion that there is no
provision in the disability plan authorizing UNUM to offer a
lump-sum payment to an employee in lieu of future payments under
the plan. When an amount is paid in settlement, we look to the
specific claims for which the settlement was paid. See Allen v.
Commissioner, T.C. Memo. 1998-406 (citing Bagley v. Commissioner,
105 T.C. 396, 406 (1995), affd. 121 F.3d 393 (8th Cir. 1997)).
If the language of the settlement agreement is not clear, we look
to the intent of the payor, considering all the facts and
circumstances. See Allen v. Commissioner, supra (citing Knuckles
v. Commissioner, 349 F.2d 610, 613 (10th Cir. 1965), affg. T.C.
Memo. 1964-33, and Robinson v. Commissioner, 102 T.C. 116, 127
(1994), affd. in part and revd. and remanded in part 70 F.3d 34
(5th Cir. 1995)). The record does not contain any documents
relating to the settlement or any information about the terms of
4 The $150,646 that petitioner received during the year in
issue comprises the lump-sum settlement of $135,000 and $15,646
in monthly benefits. Petitioners make no argument concerning the
$15,646 in monthly benefits, and there is no question that these
amounts constitute “amounts received * * * through accident or
health insurance”.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011