- 15 - evidence presented to this Court, that he experienced mental anguish and psychological problems around the time of the “demise” of HGTG, he has failed to show a direct link between his mental anguish and the settlement recovery. Although there is a tangential reference to “mental anguish” in the settlement agreement as an example of potential claims “that might have been brought”, there is no specific amount allocated to any of the 13 counts or any potential claims that petitioner might have had or that he might have subsequently attempted to perfect. Under these circumstances, petitioner has not shown that there was a direct link between the harm and the recovery; i.e., petitioner has not shown that the recovery was attributable to his personal injuries. In addition, if the settlement agreement lacks express language stating what the settlement amount was paid to settle, then the most important factor in determining any exclusion under section 104(a)(2) is the intent of the payor as to the purpose in making the payment. See Stocks v. Commissioner, 98 T.C. 1, 10 (1992); Knuckles v. Commissioner, 349 F.2d 610, 612 (10th Cir. 1965), affg. T.C. Memo. 1964-33; Metzger v. Commissioner, 88 T.C. at 847-848. Here, the settlement agreement was global in nature and was intended to settle the pending lawsuit and any other claims that might have been brought. There is no specific allocation to any particular claim. Mental anguish is onlyPage: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Next
Last modified: May 25, 2011