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not on the jurisdiction of the Orphans’ Court or the
unavailability of personal injury damages pursuant to RICO
because the determination of whether a settlement payment is
exempt from taxation depends on the nature of the claim settled
and not on the nature of the claim filed. See Seay v.
Commissioner, 58 T.C. 32, 37 (1972).
The settlement’s terms, which are inconsistent, do not
determine whether the payments are excludable. See Robinson v.
Commissioner, 102 T.C. 116, 129 (1994) (stating that “this Court
will not blindly accept the terms contained in a settlement
agreement,” especially when those terms are tax-motivated), affd.
in part, revd. in part and remanded on other grounds 70 F.3d 34
(5th Cir. 1995). The testimony of the witnesses, however, leads
us to conclude that the claims settled were in the nature of
personal injury (i.e., stress, infliction of emotional distress,
and damage to health) and based upon tort or tort type rights.
None of the parties believed that Kenneth would recover damages
relating to the Orphans’ Court and RICO claims. The personal
injury claim, however, while not filed, was viable. The sons
paid the settlement on account of this claim. The facts of this
case are consistent with those of Seay, where we held that
damages were excludable, although the claim was not prepared or
filed, when the taxpayer’s attorney believed his client had a
personal injury claim, the payer’s attorney knew of the claim,
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