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determining whether the payments are excluded from income is the
intent of the payor. See Knuckles v. Commissioner, 349 F.2d 610,
613 (10th Cir. 1965), affg. T.C. Memo. 1964-33; Bagley v.
Commissioner, 105 T.C. at 406; Bent v. Commissioner, 87 T.C. at
244; Laber v. Commissioner, T.C. Memo. 1997-559.
Petitioner has not presented any credible evidence to prove
that Okabena’s intent was other than to provide him with
severance pay under the settlement agreement. To the contrary,
the evidence establishes that Okabena intended the payments to be
exactly what they purported to be--severance payments. The
severance payments were made over a period of 18 months in
amounts equal to petitioner’s salary before he was terminated.
Okabena continued to process and withhold Federal taxes on the
severance payments as it did with other employees’ salaries. The
fact that the severance payments were treated as “wages” and
taxes were withheld provides compelling evidence that the
payments were not intended to be compensation for personal
injuries. See Mayberry v. United States, 151 F.3d at 860-861.
Petitioners contend that, under Roemer v. Commissioner, 716
F.2d 693 (9th Cir. 1983), revg. 79 T.C. 398 (1982), and Threlkeld
v. Commissioner, 87 T.C. 1294 (1986), when payments are based on
amounts of income lost due to tortious conduct, the amounts
received by the tort plaintiff or prospective tort plaintiff are
exempt from taxation pursuant to section 104(a)(2).
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