- 22 -
In this case, we are not presented with the problem of
determining the correct tax treatment of a lump-sum payment,
which may or may not have encompassed lost income, as the courts
faced in Roemer and Threlkeld. Here, the parties to the
settlement agreement carefully drafted the settlement agreement
so as to separate the severance payments from other types of
payments, including lump-sum payments that, in fact, were made to
compensate petitioner for his alleged personal injuries. Under
the circumstances of this case, the failure of the settlement
agreement to provide that the severance payments were intended to
compensate petitioner for personal injuries is compelling
evidence that the severance payments were not made for that
purpose. The settlement agreement contains a specific provision
acknowledging that the lump-sum payments made to petitioner were
intended “solely as compensation for claimed damages on account
of personal injuries arising from the occurrence within the
meaning of Section 104(a)(2)”. No such provision was included
with respect to the severance payments. The settlement agreement
also indicated that the severance payments were subject to
withholding taxes.
On this record, we can find no causal link between the
severance payments and petitioner’s alleged tort claims. There
is no evidence that the severance payments were made in
settlement of petitioner’s alleged claims for defamation and age
Page: Previous 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 NextLast modified: May 25, 2011