- 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
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