Andrew S. and Linda Hayworth Brenner - Page 11

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               C.  Respondent                                                         
               Respondent argues as follows:  The settlement payment was              
          intended by Nomura as a lump-sum payment in settlement of all               
          claims by petitioner against Nomura.  No portion may be found to            
          discharge any particular claim in the arbitration proceeding such           
          as the claim for attorney’s fees.  Even if it were assumed that             
          part of the settlement payment was intended as reimbursement of             
          the legal fees, such fees were not reimbursed pursuant to an                
          employee expense reimbursement plan covered by section                      
          62(a)(2)(A).  Petitioners were correct on the original return,              
          and payment of the legal fees is a miscellaneous itemized                   
          deduction, which, on the facts of petitioners’ return, causes an            
          alternative minimum tax liability.                                          
          II.  Discussion                                                             
               A.  Necessary Findings                                                 
               In order for petitioners to prevail, we must find that                 
          Nomura both intended at least $215,354 of the settlement payment            
          as reimbursement of the legal fees2 and made such reimbursement             
          pursuant to a reimbursement arrangement.  To make the second                
          finding, we must find both that Article XIII is a reimbursement             

               2  See, e.g., Stocks v. Commissioner, 98 T.C. 1, 10 (1992):            
          “If the settlement agreement lacks express language stating what            
          the settlement amount was paid to settle, then the most important           
          factor * * * [in making that determination] is ‘the intent of the           
          payor’ as to the purpose in making the payment.”                            

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