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The settlement agreement clearly provides that the parties
intended the agreement to settle any and all claims, including
claims that were raised or could be raised in the Federal case,
which was on appeal, and the State case. Joel Makee (Mr. Makee),
chief legal counsel at CWRU and a partner at Kelley, McCann &
Livingstone, testified that a portion of the payment was paid to
settle the Federal case on appeal because appeals are expensive.
The settlement agreement also provides that part of the payment
was paid to resolve a breach of contract claim.
Respondent argues that since the settlement agreement did
not allocate the lump-sum payment among Mr. Reisman’s various
claims, the entire amount is includable in petitioners’ gross
income. When a settlement agreement includes both contract and
tort claims, and the claims are not specifically apportioned, the
courts may not be in a position to apportion the settlement
payment among the various possible claims. See Taggi v. United
States, 35 F.3d 93, 96 (2d Cir. 1994).
As we stated previously, the settlement agreement referred
to both contract and tort type claims. The settlement agreement
did not allocate the settlement proceeds among the various
claims. Generally, when a settlement deals with a number of
claims and does not allocate the proceeds to specific claims, and
there is no evidence that a specific claim was meant to be
singled out, we consider the entire amount taxable. See Morabito
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