- 11 - 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.”Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011