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v. Commissioner, T.C. Memo. 1997-315. Where a settlement
agreement lacks express language stating that the payment was (or
was not) made on account of personal injury, we have previously
stated that the most important fact in determining how section
104(a)(2) is to be applied is “the intent of the payor” in making
the payment. Metzger v. Commissioner, 88 T.C. 834, 847-848
(1987), affd. 845 F.2d 1013 (3d Cir. 1988). In the absence of an
express settlement agreement, the payor’s purpose in making the
payment is the most important factor. See Knuckles v.
Commissioner, 349 F.2d 610 (10th Cir. 1965), affg. T.C. Memo.
1964-33.
Respondent argues that CWRU did not intend to compensate
petitioners for any purported personal injuries resulting from
tort or tort type claims.
According to the terms of the settlement agreement, the
parties acknowledged and agreed that CWRU’s payment represented
the compromise of disputed claims and compensation to Mr. Reisman
for resigning his position and relinquishment of his tenure
rights. Mr. Goldfarb testified that he was one of the attorneys
responsible for negotiating the settlement agreement on behalf of
CWRU and the primary drafter of the agreement. Mr. Goldfarb
indicated that CWRU attempted to settle with Mr. Reisman for
$300,000 because the university viewed the settlement as a buyout
of Mr. Reisman’s tenured contract, and the university normally
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